Vol. 14, No. 4: April 2004
Table of Contents — Headlines
Lean Manufacturing Takes Hold
Although EMS providers often present themselves as experts in manufacturing, at least three providers are converting to a production system developed years ago by the Japanese. These companies Celestica, Plexus and Solectron have gone public with initiatives to adopt lean manufacturing, which is based on the Toyota production system. Lean manufacturing has the potential to solve what has been an intractable industry problem: how to reconcile parts bought in advance with customers’ variable demand.
“This is what the industry has lived with for the last 25 years,” said Marc Onetto, Solectron’s executive VP of worldwide operations, during the company’s investor conference held this month. “This is the dirty secret of the high-technology industry. This is the fundamental root cause of the meltdown you saw in 2001 and 2002.” Solectron aims to address this problem of excess inventory with its lean manufacturing program.
The idea behind lean manufacturing is to eliminate not just inventory but any waste that crops up in the supply chain. According to Onetto, about 90% of what is done in a production system is non-value-add, or waste.
“Lean will give us something that does not exist today in the supply chain for the electronics industry speed,” said Onetto.
Solectron summarized the benefits it will gain from lean manufacturing:
• Reduced direct labor and operations overhead costs.
• Higher asset velocity.
• Improved inventory management.
• Lowered capital investment.
According to Solectron, typical lean implementations reduce costs by 20 to 30% over 18 to 24 months. The result is an opportunity to increase gross margins by 300 to 600 basis points, a powerful financial incentive. Solectron says some cost savings will be shared with customers. Transformation costs range from 15 to 20% of the cost of goods sold, the company reported.
Among the ingredients in a lean system are pull-based production, optimized flow, and Kaizen, the Japanese concept of making continuous incremental improvements on the shop floor. Lean manufacturing typically results in a number of changes on the production floor. For example, cycle times are reduced. There is less inventory sitting around. Changeovers occur faster. Employees work more efficiently. And less space is required for the same production. A lean system frees up space in existing facilities to create additional capacity. That saves capital, as mentioned earlier.
Solectron observed these effects when it applied lean principles. On a PCB assembly line, the provider found that a lean system reduced WIP days of supply from 7.2 to 3 days. Manufacturing lead time went from 8.2 to 1.7 days. Quality improved from 91 to 96% just by changing to a lean system. In a systems assembly cell, productivity improved by 33%, as workers who walked about four miles a week now moved less than 400 feet a week. The distance from the first to last stations shrank from 50 to 8 ft. And 600 ft2 of space was liberated. Early results from the lean program show labor productivity up by 15 to 25% and WIP inventory down by 30 to 50%.
At Celestica, lean manufacturing in some cases has resulted in a 30% improvement in the amount of effort it takes to build a product. Space reductions of 30 to 40% are often achieved at Celestica, with WIP reductions in similar ranges. Celestica began its lean manufacturing effort early last year.
Often, lean manufacturing goes hand in hand with a six-sigma quality program. For instance, both Celestica and Solectron are applying a combination of these two concepts. One of the goals of a six-sigma program is the ability to design for six-sigma, allowing a provider to predict the yield of a new product.
Installing lean manufacturing within a plant’s four walls is one thing. Bringing customers and suppliers on board is quite another. Solectron, for example, is working with Delphi, itself a lean manufacturing company, on the lean production of an instrument cluster in Guadalajara, Mexico. The provider showed a list of seven or eight customers that have engaged with Solectron to do pilot programs. On the materials side, about a half dozen suppliers have committed resources to the lean initiative.
If lean manufacturing is to solve the problem of customer variability, suppliers must buy into a system of reduced lead times. Providers who can rely on a few distributors to accomplish this will likely have an easier time installing a lean system than those with more complex supply chains.
Computer-Based Business Leads EMS Market
Market segment data based on 46 of the MMI Top 50™ EMS providers show that computer-related business made up by far the largest segment of their aggregate sales last year. Computing, storage and computer peripherals accounted for 41.7% of their sales, which totaled $75.4 billion (see chart). Since these 46 providers represented about 79% of EMS industry revenue in 2003, one can extrapolate that computer-related hardware was easily the largest segment of the EMS market last year and probably represented more than 40% of the market.
Overall market mix for the 46 Top 50 providers was calculated from market segment percentages listed for each provider (see table below).
For this Top 50 group, EMS sales in computing, storage and computer peripherals were 1.7 times greater than those in communications infrastructure, the next largest EMS segment. Combining telecom and datacom, communications infrastructure accounted for 24.3% of the group’s total sales. This value reflects a diminished position for the communications infrastructure segment after three years of weakness. Still, it is a segment that cannot be overlooked as a source of revenue.
Another substantial segment arises when consumer electronics and handheld devices are combined into a single market sector. Much of the handheld business is in cell phones, and cellular handsets are increasingly viewed as a consumer product rather than a telecom device. Together, these two consumer-driven segments, handheld devices and consumer electronics, represented 19.4% of sales for the Top 50 group.
Despite the efforts of many EMS providers to diversify into nontraditional markets, none of these segments has grown large enough to challenge the three main segments of EMS as described above. These other segments, which include industrial, medical/instrumentation, automotive and military/aerospace, generated a combined share of 14.6% of 2003 sales for the Top 50 group. Unfortunately, in a number of tier-1 cases these segments have not grown large enough to be listed on their own (table below).
Note that the 2003 share of 41.7% calculated for computing, storage and peripherals is higher than the corresponding 2002 value of 35%. Much of the 6.7% difference can be attributed to the 2003 addition of Foxconn (Hon Hai), a PC-heavy company, for which MMI estimated market segment percentages in the 2003 analysis. Also realize that not every possible sales category was tabulated here, and in some cases categories were lumped together.
Overtime Law Being Enforced in China
Critics of outsourcing to China will argue that Chinese workers are often forced to put in excessive amounts of overtime. Yet there is a national law, enacted in 1999, that requires manufacturers to seek government approval for overtime more than 36 hours a month. Now it appears that the Chinese government has started enforcing this regulation, which had been largely ignored in the past.
“The Central Government has just recently decreed that the manufacturers in China need to start following the law. This was pretty much ignored up until recently, especially in Dongguan,” said Tom Kivela, managing director of Asia Connections, Ltd. (Hong Kong).
For EMS providers, the news is both good and bad. By enforcing this overtime law, the Chinese government will give the critics of offshoring less to gripe about. But this enforcement comes at a time when EMS volumes are ramping in China. “I think most of the impact is going to happen when the forecast is moving up faster than the factory can keep up, and the company will need to apply for more than 36 hours for the workers,” said Kivela.
According to the Labor Law of the People’s Republic of China, no less than 150% of normal wages must be paid for extended working hours. If the overtime occurs on days of rest, the pay rate is no less than 200% of normal wages. For work done on holidays, the rate increases to no less than 300%.
But apparently not everyone pays the full overtime rate. Kivela knows of a factory in Fujian province that has negotiated with the local government to pay an effective rate of 1.05 times the hourly wages.
Nonetheless, overtime regulations are also appearing at the local level. Last year, the Department of Labor and Social Security in Guangdong province issued regulations stating that no unit or individual may arbitrarily extend the working hours of employees. A company may only extend working hours for operational reasons after consulting its trade union and employees. In normal circumstances, working hours may not be increased by more than one hour a day. In special cases, the work schedule may be extended by up to three hours a day and 36 hours a month.
Asia Connections is a new company formed to help US-based OEMs move selected products to Asia for contract manufacturing (see article on p. 7).
Quanta Makes Networking Move
Although ODMs have made major inroads in the computer market, EMS providers have not faced much ODM competition in networking equipment. What ODM competition there was consisted of relatively small companies specializing in the development of hardware for communications OEMs. But two recent moves in the ODM space by large Taiwanese companies show signs of a growing ODM presence in the communications infrastructure space. The latest move was made by the largest Taiwanese ODM, Quanta Computer, which last month acquired a minority interest in a networking ODM, Alpha Networks.
Quanta bought a 17% stake in Alpha Networks at a cost of NT$1.062 billion, or about $32 million. Formerly the OEM/ODM business unit of Taiwan’s D-Link, Alpha was spun off from D-Link in 2003. Alpha offers engineering and manufacturing services for ready-to-sell and customer-specified LAN/WAN, wireless and broadband networking products. News sources in Asia report that this move is in line with Quanta’s plans to develop electronic products for the home. Alpha’s products include those that are used to set up networks in the home. For example, Alpha has developed wireless LAN access points and wireless LAN adapters.
The investment in Alpha follows Foxconn’s entry into the communications ODM business through its move to acquire Ambit Microsystems (Nov. 2003, p. 1-2).
Besides producing notebook computers, Quanta has expanded into such product areas as servers, cell phones and flat-panel TVs. By forging ties with Alpha, this investment gives Quanta access to Alpha’s networking capabilities, yet another potential area for expansion.
ODM offerings in general have been branching out as both ODMs and EMS providers look for new opportunities to grow their ODM businesses (Nov. 2003, p. 2-4; Feb., p. 4-5).
For 2003, Quanta posted cumulative revenue of NT$292.3 billion, or about $8.5 billion, which makes it the fifth largest provider in the combined EMS/ODM outsourcing space. The company has yet to report its consolidated 2003 sales on the Taiwan Stock Exchange.
Hon Hai Strikes Deal with Thomson Unit
Hon Hai Precision Industry (Tu-Cheng, Taiwan), also known by its Foxconn trade name, is acquiring an optical components operation from a subsidiary of Thomson. The deal is part of Hon-Hai’s strategy to integrate from components to services.
Hon Hai is purchasing Dominant Elite Holdings Ltd., a supplier of optical pick-up heads, from Broadcast Television Systems (Hong Kong) Ltd., a wholly owned subsidiary of Thomson, for 47 million euros. A payment of 37 million euros is due upon share transfer, and the remaining 10 million euros will be paid within three years.
According to a statement filed by Hon Hai, the company will gain key optical components and modules used in optical pick-ups for CD/DVD/MP3 products. Reportedly, the deal will support Hon Hai’s business in producing DVD drives. According to DigiTimes.com, the acquisition is expected to allow the provider to minimize DVD royalty payments and to capitalize on Thomson’s reputation when seeking new business.
Reportedly, Dominant Elite operates two facilities in China.
Ansen and InnerStep Merge
Two privately held EMS providers based in the US have combined forces, creating a new company with eight sites and operations in the US, Canada and China. Ansen Corporation (Ogdensburg, NY) and InnerStep (Fremont, CA) have merged their EMS businesses effective March 31.
The merger took place through an exchange of each other’s shares. Headquartered in Fremont, CA, the combined company will carry the Ansen Corporation name and will retain all principal shareholders from both parties. The new firm’s CEO will be Jim Kingman, InnerStep’s CEO, and the new CFO will be Don Landry, also from InnerStep.
Each party brought to the deal capabilities that were attractive to the other side. The Ansen side offered ownership in a 350,000-ft2 operation in China and a microelectronics capability, both of which InnerStep lacked. Ansen’s capital backing and M&A activity also appealed to InnerStep. On the other side, InnerStep came with an experienced management staff, which Ansen could not match. Also, InnerStep had a broader domestic sales presence to reach more customers. Finally, the domestic manufacturing capabilities of the two companies were also complementary in that InnerStep’s locations were high mix, low volume, while Ansen was a medium-to-high volume shop.
Sales of the merged company are in the range of $60 million a year, and it employs about 375 people excluding the Chinese operation, in which the new company has an ownership stake. Ansen’s Chinese affiliate has 3100 employees and sales of about $80 million. Customers of the merged company include Abbott Laboratories, Ballard Power Systems, GE, Schneider Electric and Varian Semiconductor.
InnerStep lists operations in Fremont and Scotts Valley, CA; North Andover, MA; and Tuscon and Tempe, AZ. Facilities of the original Ansen are located in Ogdensburg, NY; Kanata, Ontario, Canada; and Dongguan, China. The latter operation is vertically integrated to combine electronics, plastics, sheet metal and machining. In the US, the Ogdensburg, North Andover and Scotts Valley sites specialize in complex product builds and regulated product environments. The new company will offer design and engineering centers in Kanata, Dongguan, Fremont and Tempe and a microelectronics design and manufacturing center in Ogdensburg.
“We feel that this [merger] brings both Ansen and InnerStep from a kind of a tier-3 representation to a solid tier-2 representation,” said Don Landry, the new company’s CFO. In addition to merging manufacturing capabilities, “we’ve combined into a fairly significant engineering resource. I think that’s pretty profound for us,” he noted.
The new Ansen plans to grow organically as well as through acquisitions that support its service offering. Valtec Capital, a primary shareholder in the merged company, views Ansen as a platform for growth through acquisition and OEM divestiture. Backing from Valtec will provide the new company with more financial flexibility and additional growth options. Valtec, which specializes in helping firms acquire complementary businesses, played an important role in bringing Ansen and InnerStep together. “The combined companies’ increased financial strength provides us with a compelling strategic advantage and will allow us to better help our OEM customers in their outsourcing needs as well as their divestiture programs,” stated Jim Kingman, CEO of the merged company.
Ansen was originally formed in October 2002 when the assets of Aimtronics, an EMS provider based in Kanata, Canada, were purchased out of receivership (Oct. ’02, p. 6-7). Valtec was the senior secured lender for Aimtronics’ parent company and became a principal shareholder in Ansen. At the same time, Ansen’s ownership took a stake in the Chinese affiliate, also called Ansen Corporation.
InnerStep started out in 1992 when a test and repair operation was spun off from Emerson Electric. Along the way, InnerStep made EMS acquisitions on the US East and West Coasts and in the Southwest. The company also participated in a significant OEM divestiture by Schneider Electric on the East Coast.
Divestitures completed… Solectron (Milpitas, CA) has completed the sale of two noncore businesses previously slated for divestiture. The company sold its Stream International call center business to the parent company of another call center operation, ECE Holdings (Garland, TX). Solectron also sold SMART Modular Technologies and other affiliated SMART Modular companies to Texas Pacific Group, Francisco Partners and Shah Management. The price of the Stream business was not disclosed, while the SMART Modular assets went for about $100 million in cash. (See March, p. 5-6 and Feb., p. 5) Three out of the seven businesses that Solectron planned to divest have now been sold….Competition authorities have approved Elcoteq’s divestiture of its industrial electronics business, and the sale has closed (March, p. 6). The buyer is Enics AG, a new company formed by Ahlström Capital Oy and the former management of the industrial electronics business.
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New programs…Ballard Power Systems (Vancouver, Canada) and Sanmina-SCI (San Jose, CA) will work together to commercialize and sell fuel-cell based backup power systems for the telecom industry. Sanmina-SCI will manufacture an outdoor enclosure for the system, and Ballard will supply the fuel-cell modules. The two companies have entered into memorandum of understanding for sales, marketing and product development….Among the new manufacturing customers won by Plexus (Neenah, WI) in the March quarter were Itron and GE Consumer & Industrial Products. Plexus also landed a new program from AMX. Manufacturing wins totaled six for the quarter. Engineering program wins came from companies that included Medtronic, TREK Diagnostic Systems, NMS Communications and Unisys….Taiwan’s Mitac International has begun manufacturing servers for HP, according to information originally reported by Economic Daily News, a Chinese-language newspaper in Taiwan….PEMSTAR Pacific Consultants, a subsidiary of PEMSTAR (Rochester, MN) provided engineering services toward the launch of a newborn hearing screener from Natus Medical (San Carlos, CA)….Sonitrol (Alexandria, VA) has selected CTS Interconnect Systems, a unit of CTS Corp. (Elkhart, IN), to provide manufacturing and forward logistics services for Sonitrol’s security equipment….American Power Conversion, a supplier of back-up power products and services, has partnered with EMS provider Milford Manufacturing Services (Milford, MA). After working with MMS for five months, APC has completed a number of successful projects using MMS’s virtual manufacturing portal, The Looking Glass, to fulfill production needs as well as to support prototype builds and pilot runs (see Nov. 2003, p. 6-7). MMS recently added an available-to-promise capability to the portal….Express Manufacturing, Inc. (Santa Ana, CA) is providing assembly, testing, packaging and fulfillment for the flagship product of Raptor Networks (Aliso Viejo, CA), a supplier of distributed network switching technology….IdleAire Technologies (Knoxville, TN) has awarded Siemens Energy & Automation a $10-million contract to assemble key components of IdleAire’s Advanced Travel Center Electrification system for the trucking industry. Siemens’ Electronics Manufacturing Center in Johnson City, TN, will assemble the primary user input device for the system, which provides air, Internet access and entertainment options for trucks with engines turned off….Under an exclusive manufacturing agreement, CirTran (Salt Lake City, UT) will manage most manufacturing operations through finished product build for Broadata Communications Inc. (Torrance, CA), a digital fiberoptic communications firm. CirTran is projecting that the three-year agreement will generate multimillion-dollar revenue for the provider in 2004….The UK’s Cocom International, a newly acquired subsidiary of eWan 1 Inc. (Santa Ana, CA), has awarded a $30-million manufacturing contract to Linux Technology Limited (ECS Group) of Taipei, Taiwan. Linux Technology will supply Cocom with its Digital Media Center Set Top Devices over a period of 24 months.
ODM programs…Universal Scientific Industrial Co., Ltd. (Nan-Tou, Taiwan), an MMI Top 50 EMS provider that is increasing the ODM percentage of its business, recently announced two ODM programs. USI has started LCD TV shipments to ViewSonic and has landed vertical application devices business from Symbol Technologies.
New facilities…Jabil Circuit (St. Petersburg, FL) has leased 630,000 ft2 in Memphis, TN, and will use the space for final assembly, according to the Memphis Business Journal. The provider’s EMS operation in Memphis is moving to the new facility, which will increase staffing by 200 or so people, according to Jabil. Jabil Global Services operates a separate facility there with 275,000 ft2….Plexus plans to purchase a 164,000-ft2 facility in Penang, Malaysia, part of a $12-million investment to expand the provider’s operations in Penang. The company is projecting that it will outgrow its current capacity in Asia by early fiscal 2005. Expected to be operational in the September quarter, the new facility will nearly double Plexus’ manufacturing capacity in Asia. With the addition of this facility, Plexus’ second one in Penang, 22% of the provider’s 1.6 million ft2 will reside in Asia. Also, Plexus extended the lease on Building 4 in Neenah through 2010….Fabrinet (Pathumthani, Thailand) is investing $25 million to expand its operations in Thailand. Some of this money was used to buy a 115,000-ft2 factory outside Bangkok, and the purchase was completed this month (see also March, p. 5). In addition, construction will begin later this year to expand the new factory space into a 340,000-ft2 campus, increasing Fabrinet’s total space to about 575,000 ft2. The new factories will include complete automated assembly lines for the manufacture of optoelectronic components from fiber align through assembly. As part of this investment, the company plans to add some 2500 employees….Alco Electronics (Hong Kong) is growing its new design center in Shenzhen, China. The center is now up to about 60 people.
New Firm Targets Regional Providers
Nex-Solutions (Toronto, Canada), a new company, is offering global pricing to regional EMS providers that normally don’t have access to offshore materials. This strategic sourcing forms the core of Nex-Solutions’ suite of supply-chain services, initially directed at tier-3 providers. The same services apply to OEMs, and Nex-Solutions will pursue them as well.
Under strategic sourcing, the firm offers a service called Source One, where Nex-Solutions monitors the customer’s monthly procurement volumes and cost structure. The firm compares this information real time to what is available in the Asian marketplace. As a result, Nex-Solutions can identify sourcing opportunities in Asia for certain materials. Source One can be used to buy materials at lower cost or to assure continuity of supply when product is scarce.
To tap Asian supply channels, the company has international procurement offices located in strategic markets within Asia. These one- to two- person operations are employed by or contracted to Nex-Solutions. The firm can also provide IPO sourcing in Europe.
“When we team up with a customer, I know we will be able to combat business moving offshore. And we can do that based on competitive material cost because we know that some business moves offshore when it really shouldn’t,” said Gary Itenson, founder of Nex-Solutions.
Nex-Solutions adds a margin to the material it buys for customers. That’s how customers pay for strategic sourcing.
The firm also offers fee-based services of two types. One consists of design chain services, where Nex-Solutions evaluates BOMs and AVLs. This analysis includes BOM cleansing to identify opportunities for multi-sourcing and risk assessment for continuity of supply. The second fee-based service is supply-chain consulting, which gives the customer a complete evaluation of its supply network, materials management methods and resources.
Nex-Solutions is managed by two partners, Gary Itenson, who started the company in January, and Gary Walker, who joined the firm recently. Both worked together at tier-2 provider SMTC. During eight years at SMTC, Itenson served as senior VP of supply chain management and senior VP of new business development. Walker, one of SMTC’s founders, held executive VP positions in recent years.
With a running start, the new firm is already working with two customers.
New Service Aids in Asian Outsourcing
Asia Connections, Ltd. (Hong Kong) recently started up to help OEMs move selected products to Asia for contract manufacturing.
Although located in Asia, the new company operates under the principle that not all products are suited to manufacture in the Far East. Asia Connections works with US manufacturers to select the product or product line that fits the Asian outsourcing model. Using 20 years of experience and an extensive supplier network, the company then assists the customer in transferring the selected work to Asia. The fee for these services is based on a percentage of the actual savings over state-side manufacture.
Asia Connections was founded by Thomas Kivela, managing director. The company has appointed Frank Haigh, who is based in Brockton, MA, as VP, sales and marketing USA.
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Financial news…Flextronics (Singapore) has set up a new four-year revolving credit facility totaling $1.1 billion. Meanwhile, Flextronics recently joined the investor group that is supplying funds to Bitfone (Laguna Niguel, CA), which offers over-the-air firmware update technology for mobile phones….Solectron has offered to exchange up to 41.8 million, or 95%, of its outstanding 7.25% adjustable conversion-rate equity security units. The company wants to obtain early settlement of the embedded purchase contracts and early retirement of the associated debentures. Solectron is offering to exchange 2.5484 common shares and $1.97 in cash for each equity security unit. Also, Solectron intends to use cash to repurchase convertible notes from investors who exercise their right to do so as of May 20. As of Feb. 29, these notes amounted to about $946 million….Jabil Circuit will call all of its 1.75% convertible notes due 2021 for redemption on May 18. The notes were originally issued with a total principal amount of $345 million. Redeeming the notes eliminates interest payments of $6.0 million a year. Jabil expects to incur a one-time pretax noncash charge of $6.5 million in fiscal Q3, representing unamortized issuance costs. Also, Standard & Poors’s Ratings Services has revised its outlook on Jabil to positive from stable….Viasystems Group (St. Louis, MO), a supplier of PCBs, wire harnesses and electromechanical solutions, has filed for an initial public offering. The company went private as a result of a Chapter 11 filing under the US Bankruptcy Code in 2002. Although still considered an MMI Top 50 EMS provider, Viasystems obtained 50% of its 2003 sales from PCB fabrication. Its sales totaled $751.5 million last year….Nam Tai Electronics (Hong Kong) will offer 200 million shares of its subsidiary Nam Tai Electronic & Electrical Products Limited (NTEEP) by way of a global offering consisting of a public offering in Hong Kong and an international placement. NTEEP has applied for listing on The Hong Kong Stock Exchange. The offer price per share will not exceed $0.538 and is expected to be not less than $0.455. Nam Tai will retain a 75% stake in NTEEP after the IPO if the overallotment option is not exercised. NTEEP focuses on four segments: optical devices such as CMOS image sensor modules, home entertainment devices such as camera and microphone accessories for Sony’s PlayStation 2, mobile-phone accessories, and educational products. NTEEP’s largest customers include Sony Ericsson, TI, Sony, Seiko Instruments, OmniVision, Appeal Telecom and Canon. Meanwhile, Nam Tai has increased its ownership in TCL Mobile to 9% for a consideration of $126 million. In addition, Nam Tai has agreed to invest a total of $7.75 million in France’s Stepmind, a fabless supplier of chipsets and solutions for wireless networks. The investment consists of three phases….Publicly held LMIC (Beltsville, MD) has closed private placements for $4.7 million in equity and a $5-million convertible debenture.
People on the move…Celestica’s board of directors has appointed Stephen Delaney its CEO, a position he had held on an interim basis (Feb., p. 7-8). According to the company, its board conducted a thorough review of internal and external candidates during the search for a new CEO….David Everett no longer serves as Solectron’s executive VP, worldwide sales and account management. In a February SEC filing, Solectron said Everett and the company mutually agreed that he would be leaving his position to pursue other interests….Joe Foster has been chosen as director of operations for Elcoteq Americas (Irving, TX), the Americas unit of Elcoteq Network (Espoo, Finland). Formerly, Foster served as vice president, general manager at Solectron….SMTC (Toronto, Canada) has named John Caldwell chair of the board. He replaces William Brock, who will remain on SMTC’s board. In addition, Caldwell will continue to serve as interim president and CEO until a permanent replacement is announced….Ron Jellison has resigned from his position as president of Mack Technologies (Westford, MA). According to Mack Tech, Jellison’s decision to leave the company was strictly personal and had nothing to do with the performance of the company. John Kovach, GM of the provider’s Westford site, has taken over as president. Also, Bill DeMalia, a 20-year veteran of the EMS industry, has become the new director of quality at Mack Tech….SMTEK International (Moorpark, CA) has appointed Robert Miller as VP of worldwide sales and marketing. He brings more than 15 years of industry experience, including a position as regional manager for Southern California at Future Electronics, a large distributor….Rob Subia has joined Western Electronics (Meridian, ID) as executive vice president with emphasis on business development. Formerly, he served as president and chief sales and marketing officer at EMS provider MCMS, which filed for bankruptcy protection under Chapter 11 in 2001….Nortech Systems (Wayzata, MN) has hired Richard Wasielewski as CFO. Since 2000, he served as controller/senior director of Operations Finance at Select Comfort (Minneapolis, MN).
More cuts…Faced with the need to accelerate profitability growth, Celestica’s new CEO, Stephen Delaney, has announced a new restructuring effort. Celestica plans to reduce its workforce by about 5000 employees in the next 12 months, mostly in the higher-cost geographies. These cuts include over 20% of the executive staff. As a result, Celestica expects to take further pretax charges in the range of $175 to $200 million. Under an earlier program, the company will also close its Kirkland (Montreal), Canada, plant by the end of Q3 and its Chippewa Falls, WI, plant by the end of Q4. These two actions will result in the loss of 900 jobs. In addition, Celestica will consolidate some of its acquired MSL facilities and recorded a $35-million liability as part of the MSL transaction….According to a Swedish news service, Flextronics will lay off 350 people in Sweden. Reportedly, the cuts will be made in its Network Services business….Sanmina-SCI was scheduled to close a plant in Richmond, KY, last month, according to local news reports.