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Eight New Contracts WonNIWOT, Colo. The Dii Group Inc. announced that Dovatron, its contract manufacturing subsidiary, recently signed eight new programs with seven new customers and one existing customer, amounting to more than $200 million of annualized revenue. Two of the programs are printed circuit board (PCB) assembly in China for Matrox Corp., and PCB assembly and box build for home networking products for Tut Systems. The remaining business is primarily in the datacom/telecom markets. All of the contracts include PCB assembly, and several add a box-build component.

In other company news, Multek, the Dii Group's PCB-producing subsidiary, hired three new senior managers. Charles Hall and Jorge L. Valladares Jr. joined the organization as vice president and general manager of the Austin, Texas, and Irvine, Calif., facilities, respectively. In addition, Bruce Brunton was added as the new vice president and general manager of Dii Interconnect Systems, Multek's backplane business, in Austin.

"As Multek takes its position as a top contender in the worldwide PCB industry, we are delighted to augment our management team with seasoned professionals such as Chuck, Jorge and Bill," said Steve Schlepp, Multek's president. "They each have significant experience in the industry and will help continue to build Multek's competitive position."

Finally, Dii Technologies Design, a subsidiary that offers PCB engineering and design services, hired Cliff Rose as its new operations manager for the Austin, Texas, design center. Rose will manage eight PCB design engineers.

"In addition to a strong background in electronics design, Cliff has unusually strong process improvement and people skills, which will make him a strong leader for our Austin design team," said John Hood, Dii Technologies Design's vice president of operations.

Solectron Works with IBM, TrimbleMILPITAS, Calif. Solectron Corp. signed a letter of intent with IBM Corp. to assume worldwide new product introduction (NPI) and manufacturing responsibility for the PCB assemblies manufactured in IBM's Greenock, Scotland operations. As part of the agreement, Solectron intends to establish a full-service NPI center in the Greenock area. Volume PCB assembly services will be transferred into Solectron's existing global manufacturing operations. The company will also provide fully integrated PCB assembly services to IBM, including early prototyping, new product launch, PCB assembly and test, volume production, end-of-life support, and life-cycle management, for the next three years.

Solectron will provide IBM with full-service NPI management through its new NPI center located in the Greenock area; it will be operational by the end of the year. NPI management includes a full range of pre-manufacturing services, specifically component and concurrent engineering, test development, prototype, procurement and assembly. The company plans to begin its NPI operation with approximately 65 IBM design, test and manufacturing engineers and related support associates, as well as certain equipment and inventory from the IBM Greenock facility.

Solectron also signed an agreement with Trimble to assume full manufacturing responsibility for Trimble's Global Positioning System (GPS) and related radio frequency (RF) technology products for the next three years. The company will also acquire Trimble's manufacturing assets in Sunnyvale, Calif.

"We are extremely pleased to be working with Solectron," said Steve Berglund, Trimble's president and CEO. "Trimble's management can now strengthen its focus on technology innovation and addressing our markets' needs."

Finally, Solectron and Glenayre terminated their negotiations related to Solectron's acquisition of Glenayre's RF design and manufacturing assets in Quincy, Ill. The companies did agree, however, to discuss other areas of possible collaboration.

General Instrument Chooses CM PartnerSAN JOSE, Calif. General Instrument Corp. recently chose Flextronics International Ltd. as a global strategic manufacturing partner. In its newly expanded Guadalajara, Mexico, Industrial Park, Flextronics will provide manufacturing services and production for General Instrument's satellite TV set-top terminals for the Satellite Broadcast Network Systems business unit based in San Diego. Flextronics will also provide support services from its San Jose product introduction center (PIC), including functional test and development, board layout and new product development.

"This strategic relationship offers General Instrument enhanced operational flexibility through Flextronics' extensive network of integrated manufacturing and engineering services in the world's major electronics manufacturing markets," said Michael Marks, chairman and CEO, Flextronics.

Ed Rushing, senior director of operations, General Instrument's Satellite Broadcast Network Systems business unit, commented, "Flextronics' commitment to service, strategic locations and extensive range of manufacturing services allow General Instrument to respond to global market forces quickly and efficiently."

Nortel Divests to Five CMsBRAMPTON, Ontario Nortel Networks entered into agreements with five manufacturing services companies to divest or outsource certain manufacturing and repair operations. The company plans to establish strategic supplier relationships with each company. The five are: SCI Systems Inc., Huntsville, Ala.; C-MAC Industries Inc., Montreal; Sanmina Corp., San Jose, Calif.; Communications Test Design Inc. (CTDI), West Chester, Pa.; and United Tri-Tech Corp. (UTTC), Cornwall, Ontario.

SCI will purchase Brock Telecom Ltd., a wholly owned subsidiary of Nortel. SCI will also purchase the electronics manufacturing assets located in Nortel's Belleville, Ontario, facility and two surface mount lines in a St. Laurent, Quebec, facility. SCI will supply PCB assemblies to Nortel as part of the supply agreement.

Under proposed agreements, C-MAC would acquire the assets associated with the electromechanical subsystems design and manufacturing operations for Nortel's carrier business, and Sanmina would acquire similar assets for the Nortel wireless business. Before final agreements are reached, there will be a period of consultation with employee representatives in Europe.

CTDI will acquire all assets associated with the repair and repair logistics operations in Mississauga, Ontario; Nashville, Tenn.; Sunnyvale, Calif.; and Richardson, Texas. The company will also become a supplier to Nortel for repair and repair logistics services.

Finally, the assets of Nortel's Burnaby, British Columbia manufacturing operations will be sold to UTTC. Under the terms of the supply agreement, UTTC will supply the associated products from its Lethbridge, Alberta facility. As a result, Nortel will exit manufacturing operations in Burnaby and 140 positions will be eliminated.

Chinese CM AcquiredST. PETERSBURG, Fla. Jabil Circuit Inc. signed a non-binding letter of intent to acquire GET Manufacturing Inc., Hong Kong. The acquisition was expected to close by August 31, 1999.

"The acquisition of GET provides Jabil an immediate and very solid foundation in China, satisfying an important strategic objective of our company," said Tim Main, president, Jabil. "Additionally, GET has 30 years of profitable operations in China, a solid customer base without overlap to Jabil's, a complete product assembly competence including a substantial injection-molding infrastructure, and a management team focused on quality execution."

Roger Nordby, president and CEO of GET, commented, "We believe the combination of GET and Jabil will provide a substantially enhanced solution for our current and future customers. The complementary aspects of global expansion, customer base and the future growth of the overall industry make this a powerful synergistic combination."

According to Main, China is forecasted to be the largest national market for important target industry sectors, including telecommunications, over the next four years. "We believe that possessing an outstanding capability in China will be key to fully exploiting these opportunities in the years to come. We look forward to swift completion of the acquisition and to welcoming GET employees to the Jabil family," he added.

Merger CompletedHUDSON, Mass. ACT Manufacturing Inc. completed its merger with CMC Industries Inc. (see CM News, July 1999 SMT, p. 94-95). The combined company, moving forward under the ACT Manufacturing name, will have nearly 1,000,000 sq. ft. of capacity, reportedly making it one of the largest companies in the global electronics manufacturing services marketplace.

"Our merger with CMC is a landmark achievement and we are exceptionally pleased that both ACT and CMC shareholders were enthusiastic about the significant opportunity created by the combined strength of both companies," said John A. Pino, chairman and chief executive officer, ACT. "Looking forward, we believe our growth prospects have been greatly enhanced."

Matthew Landa, president and CEO of CMC, commented, "ACT's Dublin, Ireland, facility will provide a European solution for CMC's current customer base. From a logistics and manufacturing cost standpoint, the combined company will be well positioned in the key locations around the world to provide complete product life cycle service in the most flexible, responsive and cost-effective manner."

Military Contracts Awarded, ExtendedTAMPA, Fla. Group Technologies Inc. (GroupTech), a subsidiary of Sypris Solutions Inc., signed a manufacturing agreement with Raytheon Systems Co. for the production of circuit card subassemblies valued at $59.4 million through 2003. The subassemblies are used by Raytheon in a variety of satellite communications systems being produced for the Department of Defense, including the Triband Tactical Terminal (T3) used by the U.S. Army, the WSC-6 shipboard and submarine terminal, the Global Broadcasting System (GBS), the EHF Satcom Program (NESP) for submarines, ships and land-based systems used by the U.S. Navy and Airforce Satcom equipment.

Thomas W. Lovelock, president and CEO of GroupTech, said, "We are pleased to be extending our existing manufacturing partnership with Raytheon. We believe that our core competency in managing complex programs and our ability to ramp-up production quickly were key differentiators in this competitive bid situation."

GroupTech also received an additional $3.8 million from AlliedSignal Aerospace for the production of circuit card subassemblies for the AH-64 Apache Longbow attack helicopter under a previously announced contract. The subassemblies will be integrated into the cockpit display units of the Apache.

Merger Integrates CM ServicesCHATSWORTH, Calif. In an effort to provide a single-source turnkey solution from product design through production, CriticalPath Technologies Corp. formed a linked manufacturing service organi-zation. This corporation, formed through the merger of Ambitech Inc., Chem-Lab Circuit Co., Start-Up Technologies and 3D-CAM Inc., intends to provide an integrated set of products and manufacturing services, allowing OEMs to interface with a single supplier and, theoretically, reduce time-to-market.

Key to this manufacturing initiative is the organization's coverage and direct control over key elements in the supply chain, including PCB design support and fabrication, rapid mechanical prototyping, injection molding and plastic casting, PCB assembly, and system-level integration. Also offered are electrical and functional testing.

Expanding in a FlashFREMONT, Calif. Flash Electronics Inc. entered into a lease agreement with CarrAmerica Reality Corp. for its second site in less than 18 months. The new 44,000 sq. ft. facility is located less than a mile from Flash's 52,000 sq. ft. headquarters.

"This expansion nearly doubles our manufacturing capacity and should enable Flash to continue its ... annual growth rate," said Chin Fan, Flash president.

The new site is located in CarrAmerica's Fremont Technology Park, and occupies 9.13 acres in a campus setting."Flash is now on track to enter 2000 with a run-rate exceeding $100 million," commented Ed Hayes, vice president for corporate development. "Also, we are seeing increased customer demand for our system manufacturing capabilities."

The company also announced that it completed stringent compliance audits for quality, electromagnetic compatibility (EMC) and safety by two regulatory organizations, BABT (England) and TUV (Germany).

BABT is the approvals authority for U.K. telecommunications equipment and one of the major approval bodies in the European Union (EU). It also offers a wide range of international consulting, compliance assessment and certification services.

TUV is one of the world's largest ISO 9000 registrars. The organization is structured to provide product testing and certification for electrical and mechanical safety, and EMC.

Business Alliance FormedJACKSON, Mich., and OTTAWA Sparton Corp. created a business alliance with OCM Technology Inc. (OCMT). Coupled with the expansion of Sparton's London, Ontario, facility, this agreement is intended to strengthen both company's presence in Canada.

"This venture between OCMT and Sparton will enhance Sparton's position in the electronics manufacturing services industry," said David W. Hockenbrocht, president of Sparton. "Teaming with OCMT allows Sparton to successfully meet the front-end manufacturing needs of current and future customers in Ottawa, one of Canada's largest technological [and] telecommunication centers."

Michael Jullian, president of OCMT, added, "This arrangement allows a regional base of operations for Sparton and a North American presence for OCMT. By utilizing Sparton's assets and experience, OCMT will have the resources necessary to serve an expanded customer base."

Plexus, SeaMED MergeNEENAH, Wis. Plexus Corp. completed its merger with SeaMED Corp., a designer and manufacturer of advanced durable electronic medical equipment. Under the terms of the agreement, SeaMED becomes a wholly owned subsidiary of Plexus.

"The acquisition of SeaMED significantly increases our overall engineering capabilities and strengthens our presence in the medical market," said Pete Strandwitz, chairman and chief executive officer of Plexus. "This addition provides Plexus with new growth opportunities with current and potential customers, while demonstrating our commitment to geographic expansion."

Bob Berg, president and CEO of SeaMED, commented, "There are remarkable synergies between these two companies. We look forward to joining the Plexus family and leveraging our growth opportunities in the medical and commercial markets."

Outsourcing's Role ExpandsALAMEDA, Calif. Two recent reports from Technology Forecasters Inc. emphasize the changing role of outsourcing in the electronics industry. The first, World-Class Outsourcing for Electronics Manufacturing, said that the delegation of longer links along the value chain is making outsourcing decisions more critical to electronic equipment companies.

Approximately 30 experts, including users and suppliers of contract manufacturing services, contributed their experience to the report. "The goal of this guide is to systematically assist electronics companies with the make-or-buy decision including whether, what and how much to outsource," said Pamela Gordon, certified management consultant and president of Technology Forecasters. "It helps managers to select and manage contract manufacturers (CM) in an efficient and educated manner, while avoiding common and deadly pitfalls."

Tom Smith, vice president of sales, Advanced Material Solutions, Fremont, Calif., commented, "The [guide] has a lot of really valuable information that will assist us in what we do. Any hardware company [that] is going into outsourcing needs this guide; they won't make the progress they hope to make without first analyzing their needs, which is easy to do with this [report]."

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The second report, Contract Manufacturing from a Global Perspective, asserts that by shifting supply management from their own control to that of their CM, OEMs are hoping to take advantage of the resulting efficiencies to reduce costs. "Electronics [CMs] are migrating along the value chain to boost profits, increase revenue, achieve greater technical capabilities and satisfy OEM customers' hunger to reduce cost of goods sold," said Dr. Charles Mullen, director of high-technology consulting at Technology Forecasters. "These business advantages are realized when contractors build close relationships with suppliers and share production forecasts and inventory levels in exchange for similar information."

To successfully manage suppliers further along the value chain, CMs are purchasing advanced information technology tools. They are also hiring personnel often from the OEMs and suppliers themselves adept at finding and managing suppliers of services and products as diverse as system design, application-specific integrated circuits (ASIC), sheet metal, shipping materials and toll-free order services (see figure)."Success in the future will be based on the success of your supply-chain network, rather than on just the success of your single company," said Mullen.

For more information, call (510) 747-1900 or visit www.techforecasters.com.

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