First-half 2005 results are in for the large US-traded providers, and the data does not bode well for growth of this EMS sector in 2005. If these results are an indication of how the full year will unfold, then 2005 will be a far cry from the banner sales year enjoyed by these providers in 2004 when their collective revenue increased by 20%. This data also calls into question how much growth the EMS industry can expect this year.
As a group, the nine largest providers listed in the US showed no growth in the first six months of 2005. But the news gets worse. When sales for eight of them were projected for nine months, the year-over-year change slipped into negative territory at -1.9% (Table 1). To come up with nine-month projected sales, MMI added actual sales for the first half of 2005 plus a Q3 estimate equal to the midpoint of company guidance for Q3. (One provider, PEMSTAR, was not included because its Q3 2005 guidance and Q3 2004 sales are not comparable.)
If the eight providers hit the midpoint of Q3 guidance, then the four largest companies will see their sales decline in the first nine months of 2005. Even if they come in at the high end of guidance, three out of four will still experience revenue slippage for the period. On the other hand, the four companies on the bottom half of the list are all expected to record growth for the first nine months, even at the low end of their Q3 guidance.
What does the year look like for this group of eight publicly held providers? Although MMI is not in the forecasting business, MMI can go through scenarios for a flat year and for an up 5% year. The two scenarios start with nine-month estimates incorporating midpoints of Q3 guidance (Table 1). To produce a flat year overall in 2005, the group would need an average growth rate of 12.2% from Q3 to Q4. Since Q4 has been a seasonally strong quarter in the past, this is not out of the question. Such sequential growth occurred in Q4 2003. But if sequential growth comes in below 12.2%, under this scenario, then 2005 sales for the group will decline.
While no growth is a possibility, a 5% sales increase appears unlikely for this group. In order to achieve 5% growth for the year, the group would need to post a sequential increase of 32.8% overall from Q3 to Q4. Again, this scenario assumes a Q3 estimate based on guidance midpoints.
Still, this analysis leaves out revenue from a number of Asia-based providers, most notably Hon Hai Precision Industry, which recently took over as the world’s largest EMS provider (May, p. 1). Reportedly, Hon Hai’s non-consolidated sales for the first seven months of 2005 rose 62% year over year. Clearly, if Hon Hai keeps up this rapid pace, it will supply a lift to industry sales. For example, if Hon Hai grows at 50% for the year, it will add about 7% to industry growth.
Since the large US-traded providers represent over 50% of industry sales, they have much to do with how the industry fares. If nine-month sales for this sector slip as projected, it will take a big Q4 and contributions from the likes Hon Hai to bring industry growth into respectable single digits for 2005.
Meanwhile, Q2 sales for the nine largest US-traded providers totaled 14.78 billion, up 3.8% sequentially, but down 1.6% year over year (Table 2). The group’s Q2 net income amounted to $52.0 million, well below $239.6 million a year earlier. But overall gross margin in the quarter rose to 6.3% from 6.0% in Q2 2004.
First-half sales for the group were flat at $29.03 billion. Five out of nine providers reported positive net earnings for the first six months.
OEMs lured by telecom and other fast growing markets in India are increasingly asking their providers for manufacturing in India. The latest provider to establish a presence in India is Celestica, which just acquired Ramnish Electronics, an EMS provider in the Indian city of Hyderabad. With the addition of Celestica, five global EMS providers now have manufacturing facilities in southern India (see table).
Carrying about 250 permanent and contract employees, Ramnish Electronics offers services such as design, NPI, PCB assembly and system assembly to the domestic and international markets. Customers are in the IT, automotive, power electronics, white goods and appliance sectors. Some of these customers are associated with global brands. Examples include Electroluc Kelvinator (Electrolux), Tecumseh Products India, Satyam GE Software Services and SchlumbergerSema.
Four out of the five global providers in India got started there by obtaining an existing operation. (Only Elcoteq chose a greenfield approach.) These existing operations were all on the small side. But this should be no surprise given that India had been relegated to a manufacturing backwater until recently.
Providers are positioning themselves for EMS growth in India. Last month, Jabil Circuit started production in a new 175,000-ft2 plant in Ranjangaon, near the city of Pune, to serve both global and indigenous companies in India. This facility becomes Jabil’s second plant in India.
Celestica anticipates that its operation in India will grow quickly. Craig Muhlhauser, Celestica’s new president, told MMI that the land and facility acquired in the Ramnish deal offer room for expansion that Celestica will undertake as the market develops (see article below).
An unconfirmed report from The Economic Times in India quotes a Flextronics executive, Ash Bhardwaj, as saying Flextronics will establish a major production facility in India for cell phones, wireless infrastructure products and set-top boxes. When asked about this report, Flextronics spokesperson Renee Brotherton would only say that Flextronics will continue to invest in India.
Rather than start with a small plant, Elcoteq launched a new facility this year able to employ about 1000 people when fully loaded (April, p. 1).
Although providers such as Celestica see certain export opportunities, the main growth engine for the EMS business in India will be to manufacture for the domestic market. Government policies that encourage the replacement of imports will serve to strengthen the case for manufacturing in India (June 2004, p. 3).
According to the website of a regional government in Ukraine, Foxconn (the trade name of Taiwan’s Hon Hai Precision Industry) is close to starting work in the Kharkiv region of Ukraine. The website of the Kharkiv Regional State Administration reported that the Deputy Head of the Kharkiv administration, Yaroslav Yushchenko, who is the nephew of Ukrainian president Viktor Yushchenko, met with representatives of Foxconn.
Furthermore, Foxconn plans to invest more than $150 million on a project in Kharkiv’s Rogan industrial zone, according to a comment made by the governor of Kharkiv and reported on the site. In July, Interfax quoted the Transport and Communications Minister as saying that Foxconn’s initial investment will be $60 million, creating 4,000 to 5,000 jobs.
A Foxconn spokesman told DigiTimes.com that the company was only in the preliminary stage of investigating possibilities for expansion in Europe.
If the announcement by the Kharkiv government is accurate, then Foxconn would join Jabil as the second tier-one provider to set up a manufacturing operation in Ukraine. At least two other providers are keenly interested in Ukraine as a site for manufacturing (June, p. 2). Flextronics, which already has engineering operations in Ukraine, is monitoring the country closely. VIDEOTON, one of the largest providers in Hungary, has targeted Ukraine for expansion.
Given such interest, Ukraine is emerging as a leading candidate for companies seeking the lowest labor costs in Europe. But Ukraine does not have the requisite supply base. So for now, at least, Ukraine is likely to be used for products with high labor content as long as product shipping costs don’t tip the balance away from Ukraine.
EMS is a relentlessly demanding business. For providers such as Celestica, restructuring to bring costs in line only provides part of the answer for improved performance. Providers must also grow. While Celestica’s latest restructuring program has received plenty of attention, company has also made moves to foster growth. One of the most important steps taken in this regard was the recent hiring of Craig Muhlhauser as Celestica’s president and executive VP, worldwide sales and business development (May, p. 7).
Muhlhauser joined Celestica with 25 years of sales, marketing and general management experience with companies including GE, United Technologies and Ford. Most recently, he served as president and CEO of battery producer Exide Technologies. Before that, he was VP of Ford and president of Visteon Automotive Systems.
MMI asked Muhlhauser about a number of topics including Celestica’s entry into India, his plans for business development, and two high-profile customers.
MMI: How would you characterize the demand for manufacturing in India among your customers? Is this demand based on Celestica supplying products for the Indian market?
Muhlhauser: We received feedback from customers outside of India that they’re interested in establishing a supply chain to support the anticipated continued growth of India as a marketplace for a number of our target markets. In that regard, we decided to expand our footprint to include the recent acquisition in India. The customers involved span market segments from telecom to consumer to various industrial customers. Typically, they want to sell products into the Indian market. As you probably know, there are some significant duties associated with importing products. Plus, as a market develops, the cost to serve becomes an important element of this strategy.
We have a three-pronged strategy in India. First is to support the Celestica customer requirements for a local supply chain to serve the Indian market. Second would be to develop local manufacturing and supply chain services for customers that are local to India. And third, I’ve had some success frankly in some other businesses actually using India as a base of export in particular for Europe and in some cases exporting back into countries like Japan.
MMI: Is Ramnish moving to expanded facilities in order to accommodate demand from Celestica’s global customers? How large will the new facilities be? How fast do you expect your new India operation to grow?
Muhlhauser: The expanded facility as well as the land that we purchased as part of the acquisition has substantial expansion capability that we will develop as the market develops for us in India. We expect to see growth from the combination of Ramnish and Celestica’s contributions. I think it’s premature to establish any projections at this point. But we anticipate the Indian operation will grow and grow quickly.
MMI: Obviously, you could have taken the greenfield route. But you chose to acquire an operation in Hyderabad. This is not one of the cities that other global providers are using.
Muhlhauser: If you look at Hyderabad, it’s a central location, which is close to what is called the Golden Quadrilateral. It’s a road network with good airport connections. The city is popular with mostly software and IT companies. You’re right: you don’t see the traditional usual suspects in Hyderabad, and we hope that’s to our advantage. It’s about an hour away by air from other manufacturing hubs such as Chennai, Bangalore and Mumbai. And it’s an hour away by air from major seaports, Chennai on the East Coast and Mumbai on the West Coast. It’s reasonably well connected by road and train for overnight travel to Chennai, Bangalore and Mumbai as well. So it has good infrastructure. We felt that it was one of the top three locations in India to begin to build our base of operations over there. The cost of doing business is lower than in the traditional Bangalores, Mumbais or Dehlis. And the labor market is both very well educated and plentiful. So we think it’s well suited for what we’re trying to do.
As to the other question: why Ramnish? Number one, obviously we need a partner. We feel that this is an excellent choice to accelerate our development. They have an organically grown business, which has shown the ability to grow profitably. That is important to us. Although Ramnish is relatively small in the big scheme of things today, they have a very strong and diversified customer base, both with key Indian customers and some multinational corporations. They have a very good culture in terms of business acumen. We have been very pleased with the due diligence. They’ve had excellent customer loyalty, and they’ve never lost a customer. So we feel very pleased that their culture will fit very well with ours.
Their customers are asking them to scale up and expand their capabilities so we believe the deal is consistent with their strategic direction. The management team is extremely passionate and genuinely excited about being part of a larger global team. Obviously, we expect to benefit from their knowledge of their local markets.
Also, our customers, of course, are currently sourcing from China. As they look to balance their risk, they also want to have some options. India might present one of those options.
MMI: Does Celestica have a strategy for low volume, high mix? A recent trend among your competitors is to pursue that strategy on a dedicated basis.
Muhlhauser: The ultimate implementation of lean is being able to build things in lots of one as efficiently as we build things in lots of a million. If you came to the Toronto facility, you would see a factory within a factory. It’s almost like a minimart now where we have very efficient U-shaped cells. This means stripping out all the conveyors.
Not only is there low volume, high mix, but you have rapid fluctuations in volume based on what’s happening in the end markets. For me, this is really where we must take lean to the next level. We’ve made tremendous progress here in Toronto, and we are taking it around the world.
MMI: Do you plan to make changes in Celestica’s sales and business development organization or its business development strategy?
Muhlhauser: We’re going to make changes to, first of all, the strategy. We’re going to be targeting customers that represent the kind of opportunities where we feel we can be the most successful in supporting. So we’re going to strengthen our market focus. We’re going to strengthen our understanding of those customers in those markets. We’re going to strengthen our understanding and knowledge of our customers’ customer. We’re going to clearly make sure we get the right people in the right jobs with the right incentive to drive the right behavior. We’re looking at the talent across the board because obviously we want to strengthen our relationships at all levels of the customer organization.
Then we’re going to be driving the company from a customer-back standpoint where we’re going to be designing the organization to serve the needs of the customer rather than asking the customer to buy things just because we have them. I call that chuck wagon marketing. In designing our organization to meet the needs of the customer, we’re going to be tailoring those design points to a cost-to-serve model that will be profitable and will grow successfully as customers grow over time. There will be a clear focus on execution, but also a total change in behavior and culture around running the business from the market back.
MMI: Obviously, you did your due diligence before accepting the position. What did you see in Celestica that convinced you to take this job?
Muhlhauser: Certainly, Steve [Delaney] and I worked together in my previous life at Visteon and Ford. So I had a lot of confidence in Steve’s ability. When we worked together, I was involved in putting the entire front end on Visteon from scratch – the whole sales, service and marketing – before I became the president. We took Visteon from a standing stop to about a $5-billion backlog in the course of three years.
I saw that EMS industry was somewhat locked in time, trying to add value by running things better than people who used to own them. I felt that the value creation of this industry now is at real nexus in terms of its ability to move to another level of performance, which is total cost of ownership. I felt Steve had the organization moving dramatically to improve its operational performance. He had implemented a very aggressive restructuring program to get our costs in line. So I saw a tremendous opportunity to leverage that work and begin to put the benefits to work in the marketplace. I think we’re on a bit of a curve where a lot of the things we’re doing aren’t totally represented in the numbers yet. But obviously I see tremendous potential in the momentum that we’re building here.
MMI: There has been a lot of buzz about Lucent recently. The company is consolidating its wireline business with Solectron and has signed an MOU with Celestica for wireless work. Is Celestica losing wireline business but gaining wireless business? How does Celestica come out at the end of the day?
Muhlhauser: We think we come out consistent with where we’d like to end up with the strategy at Lucent. You know the general background. Lucent has stated that they want to further optimize their supply base and streamline their business by reducing the number of EMS suppliers from a current level of five to two. As you say, Celestica and Solectron have been awarded their EMS business moving forward. So we will continue to be their largest EMS provider.
We have signed an MOU, as you mentioned, with Lucent. We will exclusively continue to provide electronics manufacturing services for their global mobility business, which is their fastest growing business segment. This was the key segment that we felt was most aligned with where we’re taking this company. We’re working to finalize the details of the formal contract. We will be, however, retaining a portion of their wireline business, specifically in the area of switching. Again, we’re sticking with areas of Lucent’s business where we think we can bring the most value.
We are giving up some of that business to Solectron. We would expect to start transitioning some of that production currently undertaken for Lucent to Solectron over the next 12 months. Steve and Tony [Puppi] mentioned in the Q2 call…that we don’t expect an impact on our Q3 results.
What this doesn’t do is indicate a market share loss. There are programs that move to and from various providers, but we feel relative market share [effects] based on our best estimates are relatively neutral. We’re also experiencing new wins and growth from new programs with existing customers and new customers, which are offsetting some of the end market weakness as well as some of the program shifts in the Lucent deal.
But we’re still their number-one partner and have a strong market position with that customer. I think that now we’re probably better positioned in the markets that will grow and be part of their future. So we’re pleased with the outcome.
MMI: So essentially there’s no significant effect on your market share?
Muhlhauser: For Lucent specifically, depending on how you measure it, you’d see a small impact. But on an overall basis, it’s relatively neutral.
MMI: On an overall basis, as far EMS goes?
Muhlhauser: In that particular segment, the communications market.
MMI: Celestica has been selected as a manufacturer for the Xbox 360. (See also news on p. 6.) This is something I would not normally associate with Celestica. Does it indicate a thrust into some of the non-IT markets such as consumer?
Muhlhauser: Yes, absolutely. Number one, it’s a marquee customer so we’re thrilled with the opportunity. Number two, we went up against some very tough competition in Wistron and Flextronics, who were doing the initial Xbox work. This company [Celestica] has the ability to do whatever it wants to do if it puts its mind to it.
I hope that our participation in Xbox will begin to signal to the industry that we are going to be a significant player, again on a very targeted basis, in key segments of markets such as consumer that represent significant growth. We also have significant opportunities to dramatically improve with world-class companies. So Microsoft will teach us a lot. I hope that we’ll teach them a lot.
Microsoft has announced that Celestica, Flextronics and Wistron will produce the Xbox 360 video game and entertainment system. Flextronics and Taiwan’s Wistron, which does both ODM and EMS work, are manufacturers of the original Xbox game console, while Microsoft’s relationship with Celestica is new.
“With three contract manufacturers on board, we’re poised to have the flexibility and efficiencies we need to keep up with the consumer demand for the world’s most powerful next-generation platform,” stated Todd Holmdahl, corporate VP of the Xbox Product Group.
The Xbox 360, Microsoft’s next-generation platform, is scheduled to launch this holiday season in North America, Europe and Japan.
All three providers will produce the Xbox 360 from plants in the Pearl River Delta region of southern China.
More new programs…Flextronics (Singapore) and Raymarine (Portsmouth, UK), which sells marine electronics to the leisure boating market, have entered into an outsourcing relationship valued at about $500 million over five years. Last month, MMI reported that Raymarine would outsource its UK manufacturing operations to an unnamed provider (July, p. 4). Flextronics will provide Raymarine with vertically integrated manufacturing services, initially through a Flextronics industrial park in Hungary. Raymarine will close its manufacturing facility in the UK, and Flextronics will not take over any Raymarine buildings, assets or employees. Raymarine said it made this decision not only to grow its gross margins but also to access the latest technologies and skills in supply chain management. The company expects to improve its product realization process, NPI, materials management, quality and global logistics….Artesyn Technologies (Boca Raton, FL), a maker of power conversion equipment and communication subsystems, has decided to award European manufacturing services work to Celestica (Toronto, Canada). Most of the products that Artesyn is manufacturing in Hungary will be transferred to Celestica’s Romanian factory in Oradea. This transition is expected to be complete by the end of 2005. Artesyn will close its manufacturing facility in Tatabanya, Hungary, and estimates it will save $6.0 million in 2006 from this closure. According to an Artesyn statement, changes in the regional sourcing needs of Artesyn customers resulted in an underutilized facility. The Boca Raton News quoted Joseph O’Donnell, Artesyn’s president and CEO, as saying the company can raise profitability by switching from $6 an hour labor cost in Hungary to $1 an hour in Romania.. The company said its decision to outsource production to Celestica was primarily based on its larger purchasing power and ability to leverage economies of scale. In addition, Celestica’s global manufacturing structure will open up sourcing options in different geographic locations as Artesyn grows its global wireless infrastructure business....Cameron Health (San Clemente, CA) has chosen Top 50 provider CTS Electronics Manufacturing Solutions (Moorpark, CA) to produce Cameron’s next generation of implantable heart defibrillators. The CTS unit, which is part of publicly held CTS Corporation, has collaborated with Cameron on the new program from earlier design phases through NPI....Publicly traded Neways Electronics International (Son, The Netherlands), another Top 50 provider, has received an order from Sweden’s Land Systems Hägglunds to supply electronic control systems for the Dutch army’s new infantry combat vehicle. The contract calls for the production of 192 systems over four years, with a total value of around 20 million euros. Land Systems Hägglunds is a subsidiary of BAE Systems….According to a posting on the website of emsnow, Axiom Manufacturing Services (Newbridge, UK) has landed a long-term contract from Radiodetection Ltd. (Bristol, UK), an existing customer that develops products for the location and maintenance of underground pipes and cables.
Other outsourcing news…InFocus (Wilsonville, OR), a maker of digital projectors and display products, recently decided to end its relationship with Flextronics, which has handled a major portion of the OEM’s contract manufacturing over the last few years. Over the next several months, manufacturing will be transitioned from Flextronics to South Mountain Technologies (SMT), InFocus’ 50-50 joint venture with China’s TCL, and another new EMS partner in China. SMT will manufacture and sell projection solutions to the parent companies and other brand operators in both China and the broader global market….Radi-Sys (Hillsboro, OR), a supplier of embedded systems, is letting go about 90 employees, primarily within the company’s manufacturing operations, where positions will be eliminated over the next four quarters in conjunctions with continued outsourcing of production to the company’s primary manufacturing partners – Celestica and Foxconn.
Celestica has acquired CoreSim (Ottawa, Canada) in a move to strengthen Celestica’s design services offering. CoreSim, a private company with 30-plus employees, provides design analysis services to internal design teams within OEMs, EMS providers and silicon vendors. The deal will enhance Celestica’s design services by adding intellectual property including CoreSim’s unique engineering tools and processes.
In particular, CoreSim will give Celestica a proprietary, model-based tool called Schematic Modeling, which identifies wiring and technology issues in schematics. Design analysis performed with this tool independently verifies customer designs before layout. This approach offers customers the ability to reduce design respins as well as other benefits such as reducing errors in schematic capture and shortening the development process.
“CoreSim’s proven track record of delivering innovative design processes and tools to the telecommunications, aerospace and defense, and enterprise markets will complement our current designs services offering,” stated Dave Tiley, senior VP, Global Services, Celestica. “This acquisition will enable us to offer our customers reduced cost on redesigns, faster time-to-market on new products and assist with product design innovations.”
The acquired firm provides advanced design analysis for new board designs and board and silicon redesign services for existing products. For existing designs, CoreSim’s analysis techniques along with real time system vector capture and hardware modeling create accurate models of hardware/software functionality and parametric operating margins.
According to CoreSim, some major telecom and defense companies build CoreSim techniques into their own internal design processes.
This is one of two acquisitions announced by Celestica in August. (See article on p. 2 for the other deal.)
Alliance…EMS provider NOTE AB (Norrtälje, Sweden) has signed an agreement to team up with Jaltek Systems (Bedfordshire, UK), an EMS company focusing on design, NPI and low-volume assembly of advanced technology products. The agreement allows NOTE to offer existing and new customers a range of services from design to low-volume production in the UK. From there, production can be transferred to NOTE’s low-cost, high-volume facilities in Eastern Europe (April, p. 3-4). Jaltek operates a facility of 1,600 m2 and employs 60 people.
Amistar (San Marcos, CA), a builder of automation equipment, has entered into a definitive agreement to sell certain assets of Amistar’s Manufacturing Services Division, known as AMS, to EMS provider SMS Technologies (San Diego, CA).
The decision to exit the EMS business, said Amistar, stemmed from the company’s need to raise cash for a new business and a lawsuit defense.
Under the agreement, Amistar will move certain AMS assets, including inventory and equipment, to SMS. After Amistar meets with its AMS customers and SMS, Amistar expects to schedule the assignment of certain manufacturing contracts. SMS stated that its San Diego factory has the capacity and ability to manufacture for Amistar’s customers.
Amistar started contract manufacturing for OEMs in the early 1990s by using its SMT and through-hole equipment.
A subsidiary of Three-Five Systems (Tempe, AZ) has signed a definitive agreement to sell the assets of TFS’s EMS operation in Redmond, WA, to Catalyst Manufacturing Services (Morrisville, NC), a privately owned EMS company. But the deal does not include TFS’s remaining EMS facility in Penang, Malaysia.
After posting losses for the fourth straight year in 2004, TFS began a review of its options for maximizing shareholder value (April, p. 6). As a result, the company earlier this year sold or closed down the various portions of its display business and signed a letter of intent to sell its RF operations in the Philippines. The review also looked at alternatives for the remaining EMS business such as selling all or part of it.
In order to make this transaction work, the TFS subsidiary, TFS Electronic Manufacturing Services, will file a voluntary Chapter 11 bankruptcy petition with the federal bankruptcy court in Arizona and seek court approval of the sale. TFS will continue to fund operations of the subsidiary through debtor-in-possession financing.
The company estimates the transaction value at about $6.6 million, subject to adjustments for accounts receivable and inventory. Catalyst will pay $3.6 million in cash and assume certain liabilities.
Started in 2002, Catalyst operates an 85,000-ft2 facility in the Research Triangle Park of North Carolina and a 40,000-ft2 facility in Endicott, NY. This deal will give Catalyst a West Coast operation. The company’s customer base spans the medical, computer, industrial networking, telecom, transportation and securities industries.
More investments in China…Kimball Electronics Group (Jasper, IN), the EMS subsidiary of publicly held Kimball International, has signed a letter of intent to establish a manufacturing facility in Nanjing, China. Plans are to start construction in Q4 and begin operations in the autumn of 2006. Kimball decided to develop the China operation, its first in the country, to strengthen its global responsiveness to customers and to add manufacturing capabilities for the automotive and industrial equipment industries. According to Kimball, the location of this operation takes advantage of a highly qualified work force, well established logistics for exporting products, and proximity to the industries served....NOTE is opening a representative office in the southern China city of Shenzhen to facilitate sourcing in China. The provider plans to sign direct contracts with Chinese component manufacturers, thereby eliminating middlemen from purchases….Nam Tai Electronics has added three SMT lines at a cost of $3.1 million to its operation in Shenzhen, China. The additional capacity was needed to meet customer demand for cell phone accessories and gaming devices.
Some financial news…Solectron (Milpitas, CA) has announced a stock repurchase program, by which the company may buy back up to $250 million of its common stock over a 12-month period through open market transactions….Elcoteq Network (Espoo, Finland) reported that Q2 sales increased 53% year over year to 982.1 million euros. Operating income for the quarter amounted to 15.9 million euros versus 9.1 million euros a year earlier. First-half sales were up 46% year over year to $1.79 billion euros…The EMS segment of CTS grew its Q2 revenue 32% from a year ago to $91.8 million, primarily from its SMTEK acquisition, partially offset by lower demand for communications infrastructure equipment. Segment operating earnings for Q2 were $2.8 million, compared with $1.9 million a year earlier….Winland Electronics (Mankato, MN) saw its Q2 2005 revenue increase by 22% year over year to a record $7.1 million. Net income for quarter amounted to $566,539 versus $78,866 a year earlier….For the quarter ended July 1, IEC Electronics (Newark, NY) earned net income of $78,000 on sales of $4.0 million. These results compare with a net loss of $1.1 million on revenue of $6.2 million for the same quarter a year ago….Worldwide Manufacturing USA (San Bruno, CA), an engineering and quality control firm specializing in international contract manufacturing, has established its own electronics manufacturing company in Shanghai, China. Production started August 1. With this move, the company expects to compete more effectively in PC board and cable assembly.
Medical certifications…Suntron’s North West Operations facility in Newberg, OR, has received ISO 13485 certification for medical product manufacturing….Reptron Electronics’ facility in Gaylord, MI, has also been certified to ISO 13485. This is the company’s second facility to receive the certification. The medical segment represents over 40% of Reptron’s current business base….And EPIC Technologies has completed the ISO 13485 certification process in its Norwalk, OH, and two Juarez, Mexico, facilities.
People on the move…Kathleen Walters will join Jabil Circuit’s all-male board of directors at the company’s October board meeting. She is president of the North American Commercial Business for Georgia-Pacific….Tadao Murakami has resigned from the chairmanship of Nam Tai Electronics for health reasons.