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Contract Manufacturer in Motion
December 31, 1969 |Estimated reading time: 11 minutes
Contract Manufacturer in MotionSAN JOSE, Calif. Sanmina reportedly has become North America's largest high-end printed circuit board (PCB) fabrication service provider. This year, the company performed numerous acquisitions and also signed agreements with major OEMs Alcatel, Lucent Technologies and Nortel Networks. Buying Ocean Manufacturing of Shenzhen, China, enabled Sanmina to benefit from China's low-cost labor rates and gain further exposure to major accounts. The acquistion of Essex AB, Sweden, provides Sanmina with plants in Finland and Sweden, and closer contact with Europe's Ericsson, Nokia and Siemens. The purchase of Lucent's San Jose system integration and fulfillment operations enhances the contract manufacturer's (CM) full system assembly and direct-order-fulfillment capabilities while promoting stronger ties to the telecom company.
Last April Sanmina acquired Salem, N.H.-based Hadco Corp., much to the surprise of many industry observers. Hadco was a PCB maker and it was believed that Sanmina already possessed PCB capabilities. What was not known, however, was that by acquiring Hadco, Sanmina not only increased PCB fabrication capabilities, but also acquired a solid management team and greater market visibility.
David Foropoulos, an analyst at SG Cowen Securities Corp., agreed with Sanmina's venture. "With industry wide capacity shortages in the [high-end] PCB marketplace, Sanmina is definitely in an enviable position with significant pricing leverage," he said.
In the latest fiscal quarter, communications accounted for 74 percent of Sanmina's sales, industrial/medical was 12 percent and high-end computing accounted for 14 percent. Additionally, Sanmina gained 700 employees as a result of a purchase last year of Devtek Enclosures Systems, a Toronto-based enclosure maker.
Another company with a "dynamic" past year is Dynamic Details Inc. (DDi), a PCB manufacturer specializing in quick-turn prototyping, or what the company calls time-critical design and manufacturing services. The company is specialized enough that other CM companies including Celestica, Jabil and Solectron use their services. Today, quick-turn manufacturing makes up 60 percent of DDi's sales.
Because DDi originally started out as a PCB maker, the company now is able to keep up with the small volumes and constant changing and setting up of assembly lines. Additionally, they can provide the feedback that customers need in this constantly changing prototype industry. DDi will continue adding capacity through acquisitions and focusing on prototype assembly. If their past track record is any indication,
DDi can expect another successful year. For example, last year, DDi bought MCM Electronics Ltd., a British CM; Automata International Inc., Sterling, Va.; and Golden Manufacturing Inc., a Texas-based provider of engineered metal enclosures and assembly services. DDi also consolidated its Colorado facility with its Texas plant to save money.
Plexus to Acquire e2E Corp.NEENAH, Wis. Plexus Corp., a provider of product development, testing and manufacturing services to the electronics industry, announced the pending acquisition of e2E Corp. (e2E), a privately held PCB design and engineering services provider for electronics OEMs. e2E is located in Hillsboro, Ore., and reportedly is the largest independent services firm in the PCB design and engineering business.
Plexus expects the acquisition to increase its PCB design and engineering capabilities as well as its geographic footprint. The venture will expand Plexus' product realization services by adding more than 100 engineers and designers in seven domestic design centers, including Hillsboro, Ore.; Nashua, N.H.; San Diego, Calif.; and Dallas.
Additionally, it will add international design centers in Melrose, Scotland, and Tel Aviv, Israel. e2E's strong telecom and medical capabilities will add expertise and resources to these areas, while increasing the customer base, which may include e2E customers Lucent, Nortel and Intel.
Sony and Solectron Form AgreementTOKYO Solectron acquired certain assets associated with two Sony manufacturing facilities which currently produce high-end consumer products such as automobile satellite navigation systems and car audio systems. The facilities, Sony Nakaniida Corp., located in Miyagi, Japan, and Sony Industries Taiwan, will become outsource facilities for Sony's electronics manufacturing services (EMS). Sony's Engineering, Manufacturing and Customer Services (EMCS) system is expected to improve efficiency, reduce cost, enhance quality, advance production technology and increase customer satisfaction.
"In order to strengthen Sony's core electronics business in the broadband era, we must regenerate our business processes and concentrate our resources and efforts for maximum benefit," commented Kunitake Ando, president and COO of Sony Corp. "As part of the reform of business processes in the production area, we are delighted to cooperate with Solectron. This will help us build a production system that preserves the high quality expected of Sony products while responding flexibly to changes in market demand."
Solectron plans to benefit by establishing a strong, full-service presence in Japan and Taiwan, two countries that are involved heavily in the worldwide electronics industry. Currently, more than a third of the world's electronics products are manufactured in Japan. Additionally, the agreement gives Solectron a foothold into the high-end consumer electronics products market.
Sanmina Corp. Announces OEM PartnershipSAN JOSE, Calif. Sanmina Corp., an electronics CM, announced a definitive agreement to acquire a 49.9 percent equity ownership in INBOARD, a manufacturer of complex PCBs and a wholly owned subsidiary of Siemens AG, Berlin/Munich. The transaction is subject to several conditions and is expected to close by calendar year-end.
INBOARD's operations include a manufacturing facility and associated offices. The division has approximately 360 employees, manufactures high-technology microvia PCBs and provides SIMOV PCBs. Additionally, the company offers a full range of design services including consulting, computer-aided design (CAD), early manufacturing involvement and assembly, testing, and logistical support services. Applications of INBOARD's products include industrial automation, telecommunications and high-end computer technologies.
"We believe INBOARD and its fabrication technology and skilled workforce provide Sanmina with a sophisticated European [PCB] manufacturing operation to support our local assembly operations and serve our expanding global customer base," said Jure Sola, Sanmina's chairman and CEO.
Viasystems, Laughlin-Wilt MergeST. LOUIS, Mo. Viasystems Group Inc., a global EMS provider, acquired Laughlin-Wilt Group Inc. (LWG), an EMS provider with facilities located in Orange County, Calif., and Beaverton, Ore.
LWG's two locations, with combined manufacturing space of 107,000 total sq. ft., house high-speed manufacturing lines providing standardized platforms for SMT, ball grid array (BGA), wave soldering, in-circuit test (ICT), pin-through-hole, box build and fulfillment capabilities. LWG currently provides a wide spectrum of services from comprehensive front-end engineering services to full-volume production. The acquisition reportedly will increase Viasystem's telecommunications presence.
"Laughlin-Wilt's strategic customer relationships and advanced manufacturing capabilities further enhance Viasystems' penetration of the telecommunications sector," says James N. Mills, chairman and CEO of Viasystems.
"Teaming with Viasystems enables Laughlin-Wilt to serve our growing customer base on a global scale," said Joe Laughlin, president and CEO of LWG. "With their global footprint of EMS facilities, Viasystems can elevate our customers to the next level of their growth strategies."
Solectron Success, Growth Is StrongMILPITAS, Calif. Solectron Corp., a provider of electronics manufacturing and supply chain management services, reported a 75 percent sales growth and 65 percent earnings growth in the fiscal fourth quarter. Although inventories reportedly increased because of new customer projects and asset acquisitions, demand for several component types continued to outstrip supply.
"We delivered an excellent quarter and full year, even as we invested in our ability to handle future growth," said Koichi Nishimura, Ph.D., chairman, president and CEO. "During the year, we completed strategic acquisitions to broaden our range of supply chain services, we expanded our global footprint with additional facilities in Europe, Asia/Pacific and the Americas, and we further strengthened our leadership team. Above all, we responded to our customers' needs."
Solectron's global demand continues and the company is responding by doubling the size of its Westborough, Mass., plant to 198,000 sq. ft. and increasing the workforce there by 800. The Westborough plant is the East Coast center for low- to medium-volume complex PCB assembly services.
In other Solectron Corp. news, Kevin Burns has been elected as an officer of the company and promoted to senior vice president and chief materials officer. Burns will continue to be responsible for leading the company's global materials management activities.
"Efficient management is critical to protecting and extending Solectron's core business and enhancing the company's overall value, and Kevin has done an outstanding job in leading our materials organization," said Nishimura. "Kevin's promotion reflects his contribution and demonstrates our ongoing commitment to strengthening our management team."
Flextronics Forms New UnitSINGAPORE Flextronics International announced the formation of Flextronics' Photonics business unit to provide design, industrialization, supply chain management and manufacturing services for the optical component and optical networking industries. Flextronics' Photonics is formed by combining existing Flextronics personnel and optical capabilities with recently acquired Photonic Packaging Technologies (PPT) Inc., Beaverton, Ore.
The company will provide photonic packaging design and optical manufacturing services. Optical component customers reportedly will receive improved scalability and access to Flextronics array of low-cost, global manufacturing operations.
Flextronics' Photonics engineering team jointly holds nine patents (with another three pending), and has published more than 40 papers on various technical areas of photonics.
Thayer Capital Partners Acquires K*TEC Electronics Corp.WASHINGTON In the firm's largest investment to date, Thayer Capital Partners, a private equity investment firm based in Washington, D.C., acquired K*TEC Electronics Corp., a vertically integrated EMS provider based in Sugar Land, Texas, from Kent Electronics Corp., a specialty electronics distributor and network integrator.
K*TEC's products include PCB assembly, electronics interconnect assemblies, cable assembly, plastic injection molding and after market repair services. K*TEC hopes to expand sales and marketing efforts within the medical, industrial and communications infrastructure sectors. The purchase of K*TEC is the latest investment by Thayer Capital Partners in the electronics and outsourced manufacturing business sector. Since 1998, Thayer has invested equity in five companies.
Jeffrey Goettman, managing director at Thayer Capital Partners, said, "K*TEK's integrated operating model offers a one-stop shopping service in rapidly evolving sectors for OEMs whose demand is characterized by small lot high-frequency purchases. As our fifth acquisition in the electronics industry, K*TEC highlights our focus on niche markets within the broader [EMS] industry such as the 'high mix' and 'quick turn' segments."
Ericsson Divests PCB Technology CenterKUMLA, Sweden Ericsson, a communications supplier, announced it has signed a
Letter of Intent to sell its PCB Technology Center in Kumla, Sweden, to Multek Inc., a wholly owned subsidiary of Flextronics International Inc. According to the agreement, Multek will offer employment to the existing 300 people dedicated to the development of technology and production of PCBs.
Bjorn Bostrom, manager of corporate supply and IT at Ericsson, said, "As the new owner, Multek will be able to focus on development and production of [PCBs], thus creating opportunities for continued development of operations in Kumla."
Flextronics, Multek's parent company, already has a well-established relationship with Ericsson. Since 1997, Flextronics has acquired numerous Ericsson production units in Sweden and around the world. The total number of employees within Flextronics in Sweden is 5,300 and 60,000 worldwide.
"With the acquisition of the Kumla plant, we will further strengthen our position as a leading supplier of [PCBs] in the data and telecom industry," states Steve Schlepp, President of Multek Inc. "The overall market demand for advanced [PCB] services is very strong and this transaction allows Multek to epxand its geographic reach into the Scandinavian market."
GroupTech Announces FormationTAMPA, Fla. Group Technologies Corp. (GroupTech), a subsidiary of Sypris Solutions Inc. and producer of secure communication products, formed an Information Assurance Consulting Service to ensure customers the security of their network systems and the internal sharing of other proprietary information.
James G. Cocke, president and CEO of GroupTech, indicated that service offerings will include, but not be limited to, network security assessments to identify the client's current security posture and recommended action plans for correction, policy and procedure development to ensure that appropriate safeguards are put in place, and security awareness training to ensure that security processes are understood and followed.
The services build on GroupTech's existing information security (INFOSEC) experience.
NLP Aids Manufacturing FirmsFORT LAUDERDALE, Fla. Approximately 641 manufacturers' CEOs, presidents and owners were surveyed via questionnaire recently. Based on these surveys, completed by TR Cutler Inc., more than two-thirds of U.S. manufacturing companies indicated the need to find solutions for employee retention and that new management techniques are being received with great receptivity.
One new managing technique is neurolinguistic programming (NLP). NLP has been in existence for more than 30 years and is used mostly among technology and progressive manufacturing firms. A three-month intensive Manufacturing NLP Coaching program of 10 employees would average around $20,000. The cost of advertising for these positions and rehiring would far exceed these costs if employees elected to work for the competition. More productive and efficient processes are what most manufacturing firms desire.
According to Thomas R. Cutler, president of TR Cutler Inc. and founder of the Manufacturing Executive Coaching systems, "Anchoring more productive and efficient processes is agreed to by most manufacturing firms. NLP plants a pattern process of results yielding both customer and employee satisfaction and retention."
CMNewsmakersPeopleMCMS Inc., San Jose, Calif., a global EMS provider, announced the appointment of Tony Nicholls as chief operating officer (COO). He will be responsible for all MCMS operations globally, including supply chain management and quality.
Bert Notini, of Manufacturers' Services Ltd. (MSL), Concord, Mass., has been promoted to chief financial officer (CFO). Notini previously was MSL's general counsel and executive vice president of business development. In his new position, he will control MSL's financial and operations strategies and lead the company's acquisition program.
Additionally, Alan R. Cormier has been promoted to vice president and general counsel. He will direct the company's legal affairs worldwide, guiding strategy and operations, including mergers and acquisitions.
Laughlin-Wilt Group Inc., Beaverton, Ore., hired Kathy Pattee and Chris Rickis to fill two customer program management positions. Both have experience in project management, new product introduction and materials.
Alejandro Gomez-Montoy was named president of Milpitas, Calif.-based Solectron Corp.'s Latin America operations. Gomez-Montoy will oversee Solectron's operations in Latin America, including the company's facilities in Sao Jose dos Campos and Sao Paulo, Brazil; and Guadalajara, Mexico.
NEC Electronics Inc., Santa Clara, Calif., promoted Bob Frane to associate vice president of the company's Roseville, Calif. facility. Frane is responsible for human resources, employee relations, health and safety, environmental systems, community relations and employee programs, corporate security, and site administration.
CompaniesSCI Systems Inc., Huntsville, Ala., signed a multiyear agreement to manufacture Telrad Networks Ltd. products. Telrad's Ma'alot, Israel, facility turns out PCB assemblies and other products for Telrad and Nortel Networks Corp.