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Flextronics Acquires Finnish CMSAN JOSE, Calif. Flextronics International Ltd. entered into an agreement to acquire Kyrel EMS Oyj, a Finnish contract manufacturer. Kyrel has offered services since 1983, and has long-established relationships with customers in the telecom industry, including Nokia and Alcatel. The company has two operations in Finland and one in Luneville, France.

"We are very enthusiastic about our partnership with Flextronics," said Simo Parhankangas, managing director of Kyrel. "It allows us to continue to focus on delivering superior service to our local customers, while adding the global capabilities and advantages of a world-class [CM]. Partnering with Flextronics is a positive step for us to enhance our best practices in customer service and to strengthen our global competitiveness."

Ronny Nilsson, president of Flextronics, Western Europe, commented, "This merger, in conjunction with the recent acquisitions of ABB and Ericsson operations in Sweden, will allow Flextronics to offer present and future customers better service due to improved experience and increased economies of scale."

In other Flextronics news, the company opened a second Industrial Park in Hungary. The Zalaegerszeg site encompasses approximately 80 acres and includes a 215,300 sq. ft. manufacturing facility that will focus on PCB and systems assembly, and produce motherboards for PCs, CD rewritables, ink-jet and laser printers, and cordless phones. The company's Industrial Park strategy co-locates suppliers in low-cost labor manufacturing regions close to major markets; in addition to the new site in Hungary, the network currently consists of operations in Doumen, China; Sarvar, Hungary; and Guadalajara, Mexico. A fifth Industrial Park in Sao Paulo, Brazil, is due to open later this year.

Preparing for Y2KMILPITAS, Calif. Solectron Corp. announced that, along with Cisco Systems, Dell Computer, Motorola and Sun Microsystems, it formed the High Tech Consortium (HTC), which will act as a resource to reduce the impact of Year 2000 (Y2K) issues on high-tech industry. It is reportedly the first consortium in the technology industry designed to establish a non-competitive, collaborative effort to increase Y2K readiness.

Solectron also released an announcement stating that, to the best of the company's knowledge, its internal systems and business processes are Y2K compliant. Three independent consultants KPMG, PricewaterhouseCoopers and Semiconductor Equipment and Materials International (SEMI)/Semiconductor Manufacturing Technology (SEMATECH) confirmed Solectron's assessment. In fact, SEMI/SEMATECH, which assigns audited companies a score of one through five with one being the lowest Y2K risk and five the highest, awarded Solectron a one.

"Solectron is taking the Y2K issues very seriously, and we have invested significant time and resources into our Y2K program to ensure our internal systems and business processes are Y2K compliant," said Susan S. Wang, Solectron's senior vice president, CFO and corporate secretary. "We recognize that the Y2K issue is not just an information technology (IT) issue it's a business continuity issue and we are committed to ensuring our readiness and meeting our customers' complete supply-chain needs well after the clock strikes midnight on December 31."

In other company news, Solectron is participating with more than 40 other high-tech companies in RosettaNet, a consortium dedicated to the development and deployment of standard electronic commerce interfaces. The product of a mandate from the IT industry to establish global business process standards for an IT supply chain involving manufacturers, distributors, resellers and end users, RosettaNet seeks to enhance efficiency in the IT supply chain, enabling businesses to operate more effectively and allowing the IT industry to serve its customers better.

Finally, Solectron was ranked no. 3 in Business Week's 1999 World's Best Performing Information Technology 100 listing. The company was ranked no. 1 in the service providers, distributors and resellers category, as well.

MSL Makes Two AcquisitionsCONCORD, Mass. Manufacturers' Services Ltd. (MSL) recently acquired two design services companies. The first, Electronic System Packaging (ESP), offers PCB design services and is based in Westford, Mass. The second, Ronlin Design Co. Inc., is an electronics design services company based in Tewksbury, Mass.

MSL will now leverage ESP's integrated suite of services including PCB design of high-speed circuits and prototype PCB fabrication and assembly. "As product complexity increases and life cycles continue to shrink, engineering and design support becomes a critical issue for our customers," said Rodolfo Archbold, chief technology officer of MSL. "ESP's emphasis on concurrent engineering with continuous design review will ensure that we deliver quality support for new product introduction."

As for the acquisition of Ronlin, Ed DeJesus, vice president of engineering and design services for MSL, commented, "Our customers face increasing pressure to design, build and ship products more quickly and cost-effectively than ever before. Ronlin's resources and expertise give our customers access to the technology and skills that will help them meet demand today and in the future."

ESP will become Electronic Systems Packaging, while Ronlin will do business as Ronlin Design; both will be MSL Engineering and Design Co.

In other company news, MSL promoted John Walshe to the newly created position of vice president of program management. Walshe will be the executive liaison for key accounts, and will work closely with executive and program management and customer focus teams to coordinate all aspects of customer relationships at both the site level and worldwide.

Introducing the Millennia GroupPITTSBURGH Millennia Technology Inc. announced the formation of the Millennia Group, which is designed to provide cost-effective total turnkey solutions for OEMs. Triangle Circuits and Millennia Technology are the flagship companies for PCB fabrication and assembly. Supporting them is a network of ISO 9000-qualified strategic partners that provide special technology not currently provided by the two companies.

Customer requests will come in through the Millennia Group, which serves as the "hub" of the network. The group will determine how best to manage the customer requests, utilizing the full scope of internal resources and external members of the strategic partnership. Sales, marketing, project management, quality assurance and billing will be the responsibility of the group.

"The Millennia Group will coordinate PCB manufacturing requirements and offer customers a one-stop source for any or all contract manufacturing services," said Mike D'Ambrosio, president of the Millennia Group. "This benefits our customers in numerous ways. It makes economic sense for [them]. The marketplace is becoming more sophisticated and competition is getting tighter. Larger companies are trying to stay focused on core competencies. We believe customers will outsource the services if it means a better bottom line."

Newly Created Company NamedAUSTIN, Texas OnQ Technology Inc. was chosen as the new name for the company created by the merger of Surface Mount Taping Corp., Austin, Texas, and Cofer Corp., San Jose, Calif. The newly named company, headquartered in Austin, specializes in value-added tape-and-reel services that include lead/mark inspection, lead conditioning, bake and dry pack, lead trim/form and engineering services. Facilities are located in San Jose; Canon City, Colo.; Austin and Dallas; Greensboro, N.C.; and the Philippines.

"We wanted a name that would make an impact, yet be easy to use worldwide," said Eric Loeffel, president of the newly formed company. "OnQ Technology embodies our philosophy of high-quality, on-time delivery, technical expertise and customer responsiveness."

OnQ also combined its two San Jose facilities into a single 45,000 sq. ft. facility. Capabilities of the facility include: tape-and-reel packaging with in-line lead inspection; fine-pitch tape-and-reel, such as TSOPs and QFPs; BGA and μBGA, ball inspection and taping; lead/mark inspection and lead conditioning; lead form and trim; bake and dry pack; and custom applications and services, especially for non-standard parts.

Divestitures Outdistancing New CM Facility ConstructionALAMEDA, Calif. Divestments of manufacturing facilities by OEMs to contract manufacturers (CM) is growing at a rate of 77 percent a year, outstripping the construction of new facilities, according to a recent study by Technology Forecasters Inc. (see chart). The study cites three reasons for contract manufacturers to buy OEM facilities: to establish operations in critical geographical regions necessary to meet revenue goals; to provide design, logistical support and other services to OEM customers; and to ally with strategically important OEM customers through takeover of their operations.

69358-th_71126.jpgCM worldwide expansion, 1996 through 1998.

The transition from OEM to CM is not always smooth, however according to senior executives involved in the divestment and acquisition process, the goals of the two parties are often quite different. The OEM is frequently concerned with the fate of its former employees that are transferred along with the divested facility. The CM, on the other hand, tends to focus on the long-term financial success of the acquired facility, especially the amount of time it will take to reach profitability.

"Misunderstandings like this can jeopardize the acquisition negotiations," said Dr. Charles J. Mullen, director of high-technology consulting for Technology Forecasters. "It is imperative for the parties to work together under a full understanding of the needs of each other to make the acquisition a success."

For more information on the report, Merger and Acquisition Activity in the Contract Manufacturing Industry: Recent Trends and Best Practices, visit Technology Forecasters' Web site, www.techforecasters.com/m&a.html, or call (510) 747-1900.

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