Vol.10, No.3: March 2000

Table of Contents

Cover story

MMI Top 50 Takes Major Slice of EMS Pie

MMI Top 50 Rankings

SYNNEX: The Unsung Billion-Dollar Player

World Markets

A Look at the EMS Market in Israel


Flextronics Beefs Up On Both Coasts

GSS PurchaseWill Put ACT in Asia

NEL To Obtain 3Com Facility

C-MAC To Acquire A-Plus

Elcoteq Gains German EMS Company

Solectron To Pick Up Another Repair Firm

Plexus Enters New England With Agility Deal

Chase Adds Another CM in New England

MercuryEMS Expands Network

Acquisitions in Asia

Deals done

CMs selling assets

Strategic relationships

New programs

New defense work

New Facilities for MSL

More facility projects

Some financial news

People on the move

MMI Top 50 Takes Major Slice of EMS Pie

Accounts for $46.57 Billion in Sales

As a group, the 50 largest EMS providers not only grew faster than the EMS market last year, they now account for the majority of its sales. In 1999, EMS sales for the MMI Top 50 totaled about $46.57 billion. If one accepts a reduced EMS market size about $73 billion for 1999 -- as advocated by Technology Forecasters -- then the MMI Top 50 took almost 64% of the market last year. Top 50 rankings appear below.

Among the 48 Top 50 companies that reported 1999 and 1998 sales, aggregate growth measured 39.8%, easily beating market averages. By comparison, the top 10 providers grew their EMS revenues by a collective 41.2%. So last year, the top 10 bracket did not enjoy much of a growth advantage over the Top 50 as a whole. Why? Look at the MMI Top 50 listings. Growth within the top 10 was, with one exception, above average, and exceeded 40% in a seven cases. Among the rest, there was far greater variation in growth rates, with six companies going negative or flat. But seven others more than doubled their businesses at triple-digit rates, which pulled up the average.

The top 10 alone raked in EMS revenue of $33.50 billion last year. Based on a $73-billion market, that total equals a market share of some 46%. If top 10 growth keeps up as expected, it won't be long before these 10 companies approach a majority position in the market. But joining this select group is fast moving beyond the reach of all but a few companies. In 1998, it took $600 million in EMS sales to make the top 10. The bar went up 54% to $923 million for 1999. The numbers for the top five are even more staggering. In 1999, minimum sales for a top-five company increased by $962 million, or 65%, to $2.43 billion. At that rate, it will take $4 billion to make the top five this year.

As anyone following the industry last year should know, Solectron took over as number one in sales for 1999. As a result, SCI Systems dropped to the number-two spot. Celestica and Flextronics retained their number three and four positions respectively in 1999. Ranked number five was Jabil Circuit, which moved ahead of NatSteel Electronics.

Unlike the years 1996-98 when the Top 50 minimum ranged between $95 and $100 million, the cut-off for 1999 rose to $120 million. This increase in part reflects the addition of some players to the middle, rather than the bottom, of the Top 50 list. Of the 11 companies added in 1999, five had sales between about $208 million and $380 million.

In light of industry consolidation, it would be fair to ask where these 11 additions come from. One, in particular, may create a stir. Without a previous listing, SYNNEX Information Technologies vaulted into the top 10. This private company, which started as a distributor to VARs, is just now telling the world about its burgeoning EMS business, largely driven by high-volume PC box build (see next article on p. 5). Note SYNNEX's model is different: motherboards for box build are sourced rather than built internally.

Three companies joined the list from the backplane side of the outsourcing space. They are HADCO-VAM, Teradyne Connection Systems and Viasystems Group. MMI believes it is valid to count their sales of backplane and higher level assemblies. Note that providers such as C-MAC Industries and Sanmina used backplanes as a cornerstone to build their EMS businesses.

Another three of the new listees -- Bluegum Group (Australia), Finmek Group (Italy) and Omni Electronics (Singapore) -- come from outside the U.S. Within the U.S., Century Electronics Manufacturing, Harvard Custom Manufacturing, and RTS International all made the list for the first time. From nearby Puerto Rico, Electronic Manufacturing Services also joined.

Of the 11 companies dropped from the 1998 Top 50, five were acquired and five missed the cut. The eleventh, Bull Electronics, declined to participate.

As for benchmark ratios, 48 companies reporting 1999 sales and year-end head count averaged about $188,100 in revenue per employee. Based on data from those 48 companies, revenue per plant came in at $94.9 million. A slightly different set of 48 providers yielded an average revenue per ft2 of $789. Moreover, 42 companies reported that at least 33.7% of their combined sales came from box build.

To be accurate, though, the MMI Top 50 does not represent the entire universe of outsourcing. Electromechanical providers, whose business revolves around enclosures, are treated separately (June '99, p. 1-5). In addition, a large amount of outsourcing bypasses the EMS industry and goes straight to ODMs (original design manufacturers). OEMs use these companies, often based in Taiwan, to design and manufacture such products as notebook computers and PCs. Unlike an EMS provider, an ODM may own the basic product design. [MMI is researching the ODM business. If you can help with that effort, please call 781-444-2154.]

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SYNNEX: The Unsung Billion-Dollar Player

Just when it appears that the ranks of the largest CMs are closed, up jumps a new name. But this emerging player, SYNNEX Information Technologies (Fremont, CA), does not obey all the rules of a traditional contract manufacturer. Last year, the private company quietly generated $1.48 billion in fiscal 1999 revenue by producing computers -- largely high-volume PCs -- for OEM customers. But rather than supporting this produc-tion with large in-house capacity in PCBA, SYNNEX sources most of its board assemblies from Asia.

Why hasn't SYNNEX surfaced before? It has, but not in the EMS business. In the early '80s, the company started out as a VAR distributor of PC products. The perception of being a PC distributor continues to stick with the company, even though distribution contributes less revenue than does manufacturing. "This company has not really made a serious attempt until very recently to correct that misclassification," explains Scott Shamlin, SYNNEX's senior VP and GM, manufacturing operations. The company wants the world to know that it has grown into an EMS company, first and foremost, with complementary core competencies in distribution and e-commerce.

Indeed, SYNNEX believes it is on the leading edge with its e-commerce capabilities. The company offers real-time, web-based, end-user facing technology that ties order management into manufacturing. In effect, this approach allows a computer company to adopt an outsourced version of the Dell model. Customers think they are ordering their computer from the OEM on the OEM's web site. But the order goes to SYNNEX, which will also track the customer's order.

Not only that, SYNNEX will provide both the web front-end and Internet connectivity. The latter is a subtle, but necessary ingredient for e-commerce. To accommodate higher levels of web site traffic, SYNNEX leases space in various data centers that are connected to the Internet around the country. This strategy allows the company to add bandwidth without waiting six to eight weeks for a T1 line to be installed.

"I know a lot of well-known EMS companies are beginning to look at this area. But in terms of the development of web-based e-commerce, certainly on the order management side, I feel we're ahead of the curve in offering such web-based solutions," says Shamlin.

SYNNEX would not be able to follow its EMS model without its relationship with Taiwan's MiTAC, the largest shareholder in SYNNEX. MiTAC, which has less than a 50% interest, provides SYNNEX with motherboards, power supplies and enclosures as well as product design services. MiTAC also performs procurement services for key items such as hard drives and CD drives and for some smaller components. SYNNEX points out, however, that it uses other sources besides MiTAC. Still, imported board assemblies mostly come from MiTAC.

The company operates four sites in the Fremont area and another in Memphis, TN, near a Federal Express hub. Facility space totals 775,000 ft2, of which some 490,000 ft2 is occupied. Of the rest, 185,000 ft2 is available for immediate expansion, while 100,000 ft2 is sublet but slated for later expansion.

For contract manufacturing, SYNNEX employs about 180 people on a permanent basis plus a temporary work force. Total head count, which fluctuates with demand, averages about 1000. "One of the major reasons that we're able to generate business from the large OEMs is our ability to manage supply-demand reconciliation on a very short cycle," says Shamlin.

Customers include the top five or six computer companies in the U.S. except for the direct sellers (Dell and Gateway) and Apple. SYNNEX turns out high volumes of PCs from two Fremont buildings each dedicated to a large OEM customer. "In some cases, ten to twelve thousand computers a day come out of these individual buildings," Shamlin points out. A third building in Fremont supports new companies that use SYNNEX as their operations organization to provide end-to-end services. Channel assembly occurs there as well. In the fourth Fremont facility, SYNNEX houses its SMT operation in the form of a single Fuji CP6-level SMT line serving customers that do not use SYNNEX for box build. SYNNEX also ships product from its Memphis facility, its largest building at 350,000 ft2, where most of its open space lies.

The company estimates that 60 to 70% of its manufacturing revenue comes from PCs. Another 20 to 22% results from building workstation-level products not based on Intel or AMD. Other products manufactured by SYNNEX include server-level systems.

SYNNEX was founded in 1980 by Robert Huang, who serves as president and CEO. The company has been offering EMS since the 1994-1995 time frame. While manufacturing revenue has surpassed distribution sales, distribution still accounted for $1.35 billion out of SYNNEX's total sales of $3.00 billion for its FY ended November 1999. Other services, mainly channel assembly, contributed $162 million of the total.

Current plans call for expansion both into Latin America and Europe, and SYNNEX already has corporate entities set up in Mexico and the UK in support of that effort.

With respect to going public, the company will only say it is considering an IPO.

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World Markets

A Look at the EMS Market in Israel

SCI's recent acquisition of an ECI Telecom plant in Israel (Jan., p. 9) has sparked interest in the Israeli market for contract manufacturing. Last year, EMS market potential in Israel amounted to about $750 million out of $1.5 billion in total cost of product. This estimate comes from Yitzhak Nissan, founder and president of Nistec Group (Petach-Tikva, Israel), which reportedly operates the largest contract design center in Israel as well as a contract assembly facility. Although about half of COGS (cost of goods) value was outsourced in Israel, actual sales from contract manufacturing amounted to much less than $750 million. That's because a large part of the contracted work in Israel is done on a consignment basis.

Nissan figures that in 1999 consignment work in Israel totaled about $120 million. He further estimates that turnkey sales fell between $50 and $70 million, representing about 10% of outsourced COGS or perhaps a little less. So adding the two numbers, Nissan comes up with total 1999 sales of between $170 and $190 million for contract manufacturers in Israel.

"For contract manufacturing here in Israel, growth averages between 15 and 20% a year," says Nissan.

Pamela Gordon, president of the consulting firm Technology Forecasters (Alameda, CA), comments, "The core competencies for many of the Israeli OEMs are innovative product concepts and strong product design capabilities; management is not as interested in manufacturing internally. Some of these OEMs therefore are calling upon the world's largest EMS companies to set up facilities and design centers there." Gordon recently returned from Israel, where she gave a series of talks about the EMS industry at events sponsored by Nistec.

According to Gordon, Israeli OEMs consist of more than 100 small and start-up companies plus a dozen or more large indigenous OEMs, such as ECI Telecom and Telrad Networks. Multinational OEMs located in Israel include 3Com, Bay Networks (now Nortel), Cisco, Applied Materials, and Qualcomm.

Gordon found that of the 30 to 40 indigenous providers, only two perform turnkey assembly. One of them is Uniskor Ltd., the largest Israeli CM with 1999 sales of about $40 million. She says recent Russian immigrants -- skilled engineers and technicians -- helped to realize the rapid growth of this company, which is less than three years old.

Some Israeli CMs told Gordon they are looking for large multinational providers as partners.

Nistec's Nissan puts the size of Israel's electronics industry at $8.5 billion, which includes the country's high-profile semiconductor sector. After growing at 6% last year, the industry is expected to expand this year at a faster rate of around 12%, reports Nissan. He says this faster growth reflects the transition of some Israeli start-ups into volume manufacturing of mature products.

With 1999 sales of $2.7 million, Nistec employs 78 people, of which 15 work in its design center. Last year, sales increased 31% over 1998, and company plans call for 30% growth this year, .

Technology Forecasters recently introduced a three-day seminar, held at OEM sites, to help management -- from start-ups through large, established companies -- realize the benefits of customized outsourcing strategies. Email inquiries to Workshops@TechForecasters.com.

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Flextronics Beefs Up On Both Coasts

Moves further into enclosures

Recently, Flextronics not only established an operating base in the U.S. Southeast, but also made an acquisition on the West Coast. Last month's M&A Scorecard (p. 3) revealed that Flextronics had scooped up four companies in North Carolina. Now MMI has learned that the EMS provider acquired PCB Assembly, a mid-tier CM in Sunnyvale, CA.

Flextronics has also been busy on the enclosure front. The company has entered into a strategic alliance with Chatham Technologies (Dallas, TX), a custom enclosure supplier.

Regarding PCB Assembly, there is little information in the public domain. This private company has maintained a low profile. However, MMI can report that PCB Assembly racked up sales of $285 million in 1999. It employs 675 people and operates three facilities totaling 190,000 ft2. The company's niche is in high-end networking/datacom and optical transmission. According to PCB Assembly's web site, box build makes up 90% of the product manufactured by the CM. Customers include Cerent (Cisco), Cabletron, Assured Access (Alcatel), Vina, Access LAN, Winet and Fore Systems.

"We think their expertise in networking, telecom and datacom equipment manufacturing enhances Flextronics' local capabilities to serve the telecom and datacom markets," says Ron Keith, VP and GM at Flextronics.

The company says PCB Assembly also has a strong management team. Dennis Kottke, owner and GM, founded PCB Assembly in 1990. Other team members include Gary Craft, business unit manager; Jack France, director of engineering; and Michael Kottke, director of operations.

Flextronics' acquisition of four companies in North Carolina's Research Triangle should not come as a total shock to MMI readers. Flextronics had told MMI it had been searching for a site in the Southeast (see box, Nov. '99, p. 4). Acquisitions of Circuit Board Assemblers (CBA), Newport Technology, EMC International and Summit Manufacturing will form an important engineering base and technology center for Flextronics in Research Triangle Park. The company intends to quickly consolidate all four companies and their 300 employees into a new facility in Youngsville, NC.

CBA is a 160-employee CM; Newport, another CM, specializes in mid-volume PCBA; EMC provides engineering and testing services to local OEMs; and Summit is a cable assembler. These acquisitions, which closed in 1999, helped Flextronics earn the title of most frequent deal maker last year (Feb. p. 3).

The company's East Coast presence was also expanded by its recent acquisition of over 200,000 ft2 and more than 700 people in Rochester, NH, from Cabletron (Jan., p. 8-9). When Flextronics completes its acquisition of the Dii Group, slated for April, East Coast capacity will total more than 600,000 ft2.

Meanwhile, through a new alliance Flextronics will provide enclosure maker Chatham Technologies access to up to $125 million in subordinated debt. This capital will be used for expansion to enhance supply-chain efficiencies for both companies' customers. Flextronics will not obtain any equity interest in Chatham as a result of this alliance. This is Flextronics' second recent move into the electromechanical space. Last month, the company announced a definitive agreement to acquire Palo Alto Products (Singapore), whose services include industrial and mechanical design and enclosure manufacturing (Feb., p. 9).

"Flextronics' support of Chatham Technologies creates synergies for both our companies and gives our multinational OEM customers access to Chatham's world-class engineering services and custom electronic packaging solutions," states Michael Marks, chairman and CEO of Flextronics. "This alliance also allows us to better serve our growing customer base in the strategically important telecommunications industry."

"Multinational OEMs' speed-to-market requirements necessitate collaboration between the electromechanical and electronics providers," adds Ross Manire, CEO of Chatham.

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GSS PurchaseWill Put ACT in Asia

This month, ACT Manufacturing (Hudson, MA) entered into a pre-tender agreement to pay about $93 million in cash for all shares and outstanding options of GSS/Array Technology Public Co. Ltd., a CM operating in Thailand. The deal will give ACT its first plant in the Far East, a 240,000-ft2 facility near Bangkok.

Certain of GSS/Array's principal shareholders have agreed to tender all their shares and outstanding options to ACT. Under the agreement, GSS would be delisted from the Stock Exchange of Thailand. The acquisition is subject to various closing conditions. Based on the time required for GSS shareholder approval of delisting, SEC approval of delisting, and the tender offer process, closing is expected in the second half of August.

For 1999, GSS' sales amounted to about $200 million, down somewhat from reported sales of $231 million in 1998. ACT told analysts that it expects the Thai operation to exit Q4 at about a $250-million run rate. The transaction is expected to be accretive in 2001.

GSS employs about 2800 people including 60 engineers, operates 22 SMT lines, and serves almost 20 customers. The largest is Spectrian, a telecom supplier of RF amplifiers. Another telecom customer is Cidco, which provides telephones and caller ID boxes to regional Bell operating companies. In the industrial market, GSS supplies two Emerson Electric companies, one of which makes sensors for valve controls and the other power protection systems. GSS' market mix consists of about 50% in telecom, about 15% in computing, and 35% in a variety of other markets including industrial. None of GSS' customers overlap with ACT's.

"The acquisition is being undertaken to establish a significant footprint in the Far East for ACT and delivers on our commitment to achieve our strategic business development objectives for global expansion," states John Pino, chairman and CEO of ACT. "The acquisition will significantly broaden our ability to provide high-quality electronic manufacturing solutions to customers on a global scale and provides us with increased opportunities to enhance our shareholder value."

ACT also believes this is a tier-one move. In a conference call with analysts, Pino said the transaction "enhances our position as a tier-one supplier in this consolidating industry."

Because of ACT's size and leverage, the company expects it will attract more opportunities from the GSS customer base than would have come to GSS alone. "The bulk of the opportunity still exists in that customer base," Pino told analysts. He added, "I think certainly there's a whole new customer base that has become available to GSS as a result of our customer base." ACT will no longer need to shy away from the Far East requirements of its customers.

For GSS, the deal will end its struggle as a mid-tier player constrained in its ability to raise capital. After the Asian financial crisis caused a major loss of business in GSS' San Jose facility, the company did not have the funds to rebuild its customer base there. So in October 1999, GSS sold San Jose assets to ACT (Oct.'99, p. 6). Earlier, GSS had also closed down its Wales, UK, facility.

"I think the fact is: you have to be large in this marketplace or you're going to be always changing over your customer base," said Pino. "I think GSS has experienced that. I think all the mid-tier people have experienced it."

Still, the Thai operation was attractive to ACT. For one thing, it makes money. "It's been a profitable operation for years on an operating basis," Pino reported. He said operating margins are in the 5+% range, consistent with what ACT experiences. What's more, ACT considers GSS a high-end technology supplier operating in a low-cost environment. And high-end capabilities include RF.

Growth is another selling point. Pino believes in 2001 GSS can grow faster than the market rate. He is looking for an increase probably "at least in the 40% range." Pino points out, "We'll have probably 50 people on the street marketing this by the beginning of next year. It's a significantly different situation than a company who's strapped from a resource standpoint and doesn't have a U.S. operation."

And there is room for growth. With the ability to produce at least $400 million in sales, the Thai operation is currently running at about 55% capacity.

ACT also holds GSS' management team in high regard. Robert Zinn, CEO of GSS/Array will join ACT as executive VP of international operations. GSS' president, James Menges, will become VP of Asian operations at ACT.

Based on street estimates, ACT expects to exit Q4 at a run rate of around $1.4 to $1.5 billion with the addition of GSS. The acquisition will increase ACT's manufacturing capacity to well over 1 million ft2.

Besides this thrust into Asia, ACT still wants to make a European deal that will add shareholder value and expand its depth in the marketplace.

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NEL To Obtain 3Com Facility

To form modem venture with 3Com and Accton

NatSteel Electronics Ltd. (NEL) of Singapore and 3Com intend to enter into a manufacturing alliance, by which NEL will acquire 3Com's operations in Mount Prospect, IL, for $130 to $160 million. NEL will also receive a three-year supply agreement from 3Com to manufacture broadband modems and carrier-based access platform equipment. Subject to approvals and due diligence, the transfer of assets will be completed in May. As a result, NEL will obtain 3Com's 690,000-ft2 facility in Mount Prospect and retain the 1200 employees who work there.

This deal follows last month's announcement that NEL is acquiring a 380,000-ft2 plant in Oregon from NEC America (Feb., p. 11). Combining for over 1 million ft2, these two acquisitions will greatly expand NEL's presence in the U.S. The company has an existing plant in Morgan Hills, CA. With these acquisitions, NEL will also enhance its position in the datacom market.

Furthermore, the Mount Prospect facility will build all products for a new company to be formed by 3Com, NEL and networking ODM Accton Technology (Taiwan). Accton is a 3Com suppler and NEL alliance partner. The new company will market all U.S Robotics-branded modems and will develop other high-speed modems. "NEL intends to take advantage of these new-found design capabilities to further penetrate the communication ODM market," states Chester Lin, NEL's CEO.

3Com, which is exiting the dial-up modem business, will take a stake of not more than 20% in the new venture.

C-MAC To Acquire A-Plus

Makes West Coast move

C-MAC Industries (Toronto, Canada) has agreed to acquire A-Plus Manufacturing (San Jose, CA), a privately held CM in which Harvard Custom Manufacturing (Salisbury, MD), another private CM, owns a controlling interest. Although C-MAC has a California operation in cofired ceramic hybrids, A-Plus will become C-MAC's first EMS operation on the U.S. West Coast. The deal is expected to close in Q2.

Like PCB Assembly mentioned earlier, A-Plus is one of Silicon Valley's largest private CMs. Based on the current run rate, A-Plus' revenues are forecasted to exceed $150 million this year. Currently in 151,000 ft2, A-Plus will expand capacity to 200,000 ft2 in August when its newest facility becomes operational. A full-service provider, A-Plus focuses on complex, high-density and high-mix PCBA and box build. The CM was founded in 1992, and Harvard Custom Manufacturing acquired a majority interest in 1997.

According to C-MAC, the A-Plus deal will strengthen C-MAC's position in the networking industry, diversify its customer base, and give it a strategic presence in the heart of Silicon Valley. A-Plus is sole source to about 80% of its customers, which include some of the leading OEMs in communications and networking. The CM has also positioned itself in the RF wireless and fiberoptic networking markets.

C-MAC says A-Plus customers will benefit from C-MAC's presence in Europe. Backed by C-MAC's size and capabilities, A-Plus will also able to pursue a broader range of customers.

"This acquisition fits perfectly within our strategy of geographical and customer diversification. In addition, the talented management team of A-Plus should play a major role in C-MAC's future development plans," states Dennis Wood, C-MAC chairman and CEO. Included in that team is Steve Chen, president of A-Plus.

C-MAC follows a strategy of selective vertical integration to provide customers with a total manufacturing solution.

Elcoteq Gains German EMS Company

Effective Jan. 1, Elcoteq Network (Helsinki and Lohja, Finland) acquired a German EMS company called Stephan Elektronik with plants in Germany and Poland as well as a customer center in Switzerland.

For 1999, net sales of the acquired company totaled about 40 million euros. Elcoteq says the deal will have a neutral effect on its performance during this year and will be positive thereafter. The acquisition strengthens Elcoteq's position in Europe and especially in Germany, where the EMS market is in its infancy, says Elcoteq.

The acquired operations now go under the name Elcoteq Elektronik GmbH and employ some 500 people. A plant in Überlingen, Germany occupies 5000 m2 and offers subassembly and engineering services. The other acquired facility, located in Wroclaw, Poland, performs box build and subassembly in 3000 m2.

Elcoteq purchased the company from its founder Helmut Stephan and his family. According to Elcoteq, the deal will make it one of the largest EMS companies operating in Germany.

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Solectron To Pick Up Another Repair Firm

Solectron (Milpitas, CA) has signed a letter of intent to acquire AMERICOM Wireless Services, a privately held company specializing in wireless handset repair and refurbishment and technical support services.

This marks Solectron's third acquisition of a repair services firm since last year (Feb., p. 4). Solectron, like Celestica and Jabil Circuit, has used an acquisition strategy to expand repair-service capabilities and capture more after-sales business. By some estimates, the opportunity in after-sales services is huge. Take the new report Electronics Manufacturing Services: The Dawn of a New Era from Merrill Lynch (New York, NY). In the Merrill Lynch report, analysts Jerry Labowitz and Brian White write that support services offer a revenue opportunity worth $600 billion, of which an estimated $100 million represents just logistics support and depot repair.

In this deal, Solectron will take over AMERICOM's business operations in Los Angeles, CA; Louisville, KY; Baltimore, MD; and Dallas, TX, as well as its field technicians and support operations throughout the U.S. Solectron intends to offer jobs to about 1000 AMERICOM workers. The transaction is expected to close by the end of May. Financial details were not disclosed.

"With this acquisition, Solectron establishes a focus on the wireless industry to provide a complete range of integrated service offerings to our customers in this strategic market," states William Mitchell, president of Solectron's global services business unit. "Our service vision is to provide our customers with the highest quality, cost competitive, integrated service solutions through the most complete global footprint in the industry."

Founded in 1984, AMERICOM serves both carriers and OEMs in the wireless industry. Services include technical support for wireless carriers; installation and maintenance of handsets, including mobile installation; handset repair and refurbishment; asset management and reverse logistics for multiple wireless technologies.

Plexus Enters New England With Agility Deal

Plexus (Neenah, WI) is acquiring privately held Agility (Ayer, MA), which will give Plexus an EMS presence in New England and specifically in the Greater Boston area.

Founded in 1969, Agility specializes in complex PCBA with complete box and system build capability. The company focuses on emerging start-up opportunities as well as medium-size OEMs. Employing about 125 people, the CM brought in sales of a little over $21 million last year. Agility's two facilities in Ayer comprise 25,000 ft2, and the company just broke ground for a 50,000-ft2 addition. When the addition is finished, Agility will end up with a single 65,000-ft2 facility.

"Agility will provide us with an excellent capability in the Boston area, where we have many excellent customers, and will accomplish our stated strategic objective of establishing a strong presence there," states John Nussbaum, Plexus' president and COO.

"The access to the technology and engineering depth of Plexus was of great interest to us, as was their volume manufacturing," says Mark Hashem, VP of operations at Agility.

Agility was founded as Diagnostic Instrument Corp. in 1969 by Jim Hashem and a partner. The partner left early on. Hashem, the company's president, has been its long-time leader.

Chase Adds Another CM in New England

Chase Corp. (Bridgewater, MA), a diversified manufacturing company with two EMS operations, has acquired Netco Automation (Haverhill, MA), a rework and prototyping house.

This deal follows Chase's 1999 acquisition of RWA, a CM in Melrose, MA. Netco will become part of Chase's first EMS operation, Sunburst Electronic Manufacturing Solutions of West Bridgewater, MA.

"Netco has developed a solid niche in the low-volume, high-technology segment of the business. Among a number of blue-chip companies, it has an excellent reputation for quick turnaround prototyping and ball grid array rework," states Peter Chase, president and CEO of publicly held Chase Corp. "As expected demand for Netco's capabilities grow, they will complement the excellent product and procurement services of Sunburst and RWA. This acquisition makes Chase's EMS business unit a full-service, regional resource to the industry."

According to Andrew Chase, who heads the EMS business unit, Netco has been "doing prototypes with all the top high-tech networking start-ups in New England."

For Netco, the deal will mean new resources to pursue growth opportunities and the ability to offer broader services such as volume manufacturing and procurement.

Rich Breault, president of Netco, is joining Chase to assume sales responsibility for the EMS business unit.

MercuryEMS Expands Network

Network Circuit Technologies (NCT), a CM in Redmond, WA, has become the latest EMS company to join the expanding network of MercuryEMS (Colorado Springs, CO). The company acquired NCT as of Jan. 1.

With 55 employees, NCT serves a four-state area: Washington, Oregon, Idaho and Montana. The CM offers design services, prototyping and high-mix, low-volume production. Customer markets include medical, industrial, avionics and telecom.

NCT gives MercuryEMS a presence in the Pacific Northwest. "NCT can help MercuryEMS offer design capability as well as low-volume production to a diverse range of our existing customers with operations in the Pacific Northwest," states David Anderson, president of MercuryEMS.

By joining MercuryEMS, NCT gains access to capital for growth and expansion. The company now works primarily on a consignment basis, but plans to shift emphasis to full turnkey production.

NCT was formed in 1990 by Scott Cull and Rodger and Merritt Nelson. Rodger Nelson serves as president.

With a presence in this region, Mercury EMS enhances its credibility as a national organization, says the company. Formerly known as Midwestern Electronics, MercuryEMS operates two EMS companies in Kansas plus CMs in Florida, Iowa, Colorado and now Washington.

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Acquisitions in Asia...PCI, a Singapore-listed CM, has entered into an agreement to acquire a PCBA plant on the island of Batam in Indonesia. This plant, a going concern, will add six PCBA lines, giving PCI a total of nine, and enlarge the company's customer base. The aggregate price was S$2.1 million....Allied Components, also listed in Singapore, is buying 16 SMT lines from Flextronics, which had obtained them from Compaq. Wire services are reporting Allied is paying $10.9 million for these lines, of which about four are being resold to another company for $3.2 million. According to Bloomberg News, Allied is also investing S$12 million for six new lines in Singapore and design capability.

Deals done...Solectron has completed the acquisition of Ericsson's telecom infrastructure equipment operations in Longuenesse, France, and Ostersund, Sweden (see Nov.'99, p. 8). Financial details were not disclosed....Celestica (Toronto, Canada) has closed its acquisition of IBM's card assembly and test operation in Rochester, MN (Jan., p. 7). Celestica expects to complete the acquisition of IBM operations in Vimercate and Santa Palomba, Italy, by the end of Q2....Sanmina (San Jose, CA) has closed on its purchase of PCBA assets from Harris Corp. (Jan., p. 8)....Boundless Manufacturing Services (Hauppauge, NY), the EMS subsidiary of Boundless Corp., has closed a deal to buy manufacturing assets from Boca Research (Feb., p. 10). BMS has assumed the lease on Boca's 70,000-ft2 facility in Boca Raton, FL.

CMs selling assets...IEC Electronics (Newark, NY) has completed the sale of certain assets associated with its former Longford, Ireland, facility. Last year, IEC announced it would close the plant (Oct.'99, p. 11). Donnelly Corp., a Michigan-based automotive supplier, bought the assets and assumed the lease on the 37,000-ft2 facility....Nortech Systems (Wayzata, MN) has sold its Imaging Technologies Division to focus exclu-sively on contract manufacturing.

Strategic relationships...Bull Electronics (Angers, France, and Lowell, MA), the EMS unit of France's Groupe Bull, and Cadence Design Systems (San Jose, CA) have formed an alliance to jointly perform design through manufacturing services for industrial companies....A subsidiary of Nam Tai Electronics (Hong Kong) and Toshiba Battery Co. have agreed to set up a joint venture to produce lithium ion battery packs within Nam Tai's Shenzhen, China complex.

New programs...In Singapore, SCI Systems (Huntsville, AL) is delivering set-top boxes for Eagle Wireless (League City, TX)....CopperCom (Santa Clara, CA) has selected Flextronics as its global manufacturing partner to produce CopperCom's voice over DSL solution....Plexus will act as global EMS provider for Sitara Networks' new family of quality-of-service appliances for deploying e-business applications on existing networks....Elcoteq will start manufacturing Ericsson mobile phones at its plant in Pécs, Hungary, during Q2....MCMS (Nampa, ID) will provide prototype and volume manufacturing services to Atmosphere Networks (Campbell, CA), which supplies on-ramps to an optical network. The provider will take responsibility for managing all Atmosphere products beginning in May. Also Digital Lightwave, a provider of optical networking products and technology, has chosen MCMS as a manufacturing partner to provide additional manufacturing capacity for certain components included among Digital Lightwave's family of products....NatSteel Electronics will build modems for Metricom's high-speed mobile wireless service....Genesis Manufacturing, an EMS provider in Oldsmar, FL, has landed a five-year contract to produce new interactive network terminals for Elcotel (Sarasota, FL), a company in the public access telecom market. Genesis will also continue to supply Elcotel with certain electronics and serve as supplier of choice for selected new products. The EMS provider aims to triple sales over the next two years....National Manufacturing Technologies (Carlsbad, CA), a vertically integrated provider of enclosed electronics, has received a three-year contract to manufacture a family of power module assemblies for Ling Electronics (Anaheim, CA), a division of Satcon. NMT's EMS backlog has grown by 50% since last September and now exceeds $16 million, including multiyear contracts....HEI - Mexico Division (Empalme, Sonora, Mexico) recently took in orders from six new EMS customers, and volume will start to ramp in Q2. Included are a $2.2-million order from a customer in fiberoptic communications and $2-million worth of business over 12 months from a company in computer peripherals. HEI, the parent company, is a Minnesota-based manufacturer of microelectronics.

New defense work...Senior Systems Technology (Palmdale, CA) will serve as the CM of choice for new RF wireless telecom programs from Boeing's Information and Communications Systems Division (Anaheim, CA). Currently in development, these products are intended for the U.S. Armed Services. Given interest from NATO countries, this work could exceed $3 to $5 million a year and could last five to seven years. Manufacturing will take place in SST's new 130,000-ft2 facility in Palmdale....Since January, Group Technologies (Tampa, FL), a subsidiary of Sypris Solutions, has been awarded card assembly contracts from Raytheon (Lexington, MA) with a total value estimated at $21.7 million.

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New Facilities for MSL

Manufacturers' Services Ltd. (Concord, MA) has opened a new design center in the Northeastern U.S. and is building a new facility in Ireland.

The company's new Northeast Engineering and Design Center is located in Westford, MA, northwest of Boston, within a hotbed for voice and data communication technology. According to MSL, this operation becomes the largest center for PCB design in the Northeast, with more than 30 design service specialists. The new center consolidates engineers formerly located in Concord, MA, and MSL's 1999 acquisitions of Electronic System Packaging and Ronlin Design. MSL says the design center will expand its support for customers during the early stages of product development and new product introduction.

In Galway, Ireland, MSL plans to have a new 60,000-ft2 plant ready for production in July. The company expects employment there to reach 150 people by year end and 600 by 2001. The Galway plant will expand MSL's operations in Ireland, as the company has an existing facility in Athlone. Initially, the new plant will serve a single customer that required more space than was available in Athlone. More customers are expected in Galway later on. The new plant will provide high-volume manufacturing, systems assembly and design services.

More facility projects...Qtron, which occupies a total of 45,000 ft2 in two San Diego, CA, facilities, plans to move to a new site with 125,000 to 150,000 ft2 in San Diego. Reasons for the move are increased levels of PCBA sales coupled with the need to provide system integration solutions. "Our revenues grew 120% from 1998 to 1999. Existing backlog and projections for 2000 along with current customer commitments will provide growth in excess of 150% this year," states Lynn Brock, Qtron's president and CEO. The CM says it must also provide a scalable platform for customer growth....MTI Electronics (Menomonee Falls, WI) has doubled the size of its Wisconsin facility to 60,000 ft2. The CM's investment in this expansion, including equipment, comes to nearly $4.0 million. "The demand in the Midwest for our services is quite high, particularly from our telecommunication customers," states Greg Martinek, president of MTI. "This expansion positions us to meet their growing needs as well as the capability to add a substantial level of new business to this operation." MTI also has manufacturing operations in Mexico, India and Indonesia. ...Elcoteq is doubling the size of its Monterrey, Mexico, plant to 16,000 m2. Production in the new premises is slated to begin at the end of Q2. ...Integrex, a new CM, has leased a 53,000-ft2 facility in Bothell, WA.

Some financial news...For the fiscal Q2 ended Feb. 25, Solectron reported sales of $2.86 billion, up 32% from a year earlier. Excluding one-time charges, the provider earned net income of $116.9 million for a 49% increase over Solectron's prior Q2. Current and historical results reflect the acquisition of SMART Modular Technologies....For Jabil Circuit (St. Petersburg, FL), its Q2 sales ended Feb. 29 increased 50% year over year to $837.6 million. Net income rose 52% to $33.9 million. The company also declared a two-for-one stock split....Celestica has completed a public offering that resulted in gross proceeds of about $757.4 million to the company....SCI Systems has agreed to sell $500 million worth of 3% convertible subordinated notes due 2007. The company intends to use the proceeds for repayment of debt. ...Sanmina has completed a $531-million public offering, not including any over-allotments....Flextronics has commenced a public offering that will amount to gross proceeds of $507.4 million....Two more CMs have gone public on Singapore's stock exchange -- Ionics EMS, based in the Philippines, and CEI Contract Manufacturing Ltd.

People on the move...Matthew Landa, president of ACT, is leaving the company to pursue other opportunities. Landa, former president and CEO of CMC Industries, joined ACT when it acquired CMC. John Pino, ACT's chairman and CEO, will resume the role of president....Flex-tronics has promoted Nicholas Brathwaite to senior VP and chief technology officer, with responsibility for integrating engineering and technology solutions across the company's global operations.... Vincent Melvin has joined SCI as chief information officer. Formerly, he served as director of IT for the Eastern Region of Solectron....Jabil has named William "Randy" Myers as operations manager at its Michigan facilities in Auburn Hills....Manufacturers' Services Ltd. has promoted Juan Simonet to VP as well as GM of its Charlotte, NC, operations....Bill Kullback has joined Pemstar (Rochester, MN) as VP and CFO.

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Copyright 2000 JBT Communications

MMI February 2000

MMI April 2000

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