Vol. 9, No. 12: December 1999


Table of Contents

Cover story

Japanese OEMs Changing Their View of Manufacturing

World Markets

Analyst Says Europe Is Hot

Another Italian CM Making Moves

News

Flextronics To Take Over Operation From Fujitsu-Siemens

More on the Flextronics-Dii deal

EMS business units coming and going

Celestica Expands Repair Business

NatSteel Electronics in Two Ventures

Another alliance

Deals done

Able Reappears

New programs

Siemens EMC announces four EMS customers

Still more new programs

Benchmark Sues J.M. Huber

Some financial news

CEO Dies Suddenly

People on the move

CEO honors

Opting for e-commerce tools

Buying other solutions


Japanese OEMs Changing Their View of Manufacturing

NEC outsources N. American supply chain to SCI

In the past, large OEMs in both Europe and Japan shared a yen for vertically integrated manufacturing. Now that European OEMs are embracing the concept of large-scale outsourcing, will Japan Inc. be next?

At least two Japanese OEMs have opened the door to outsourcing production from existing operations, and a third has announced that it will change from a manufacturing company to a solutions provider. What’s more, Japan’s telecom industry is waking up to the realities of global competition.

Mitsubishi was billed as the first Japanese OEM to outsource a manufacturing operation when in 1998 the company transferred its cell phone production in Georgia to Solectron. Now comes NEC. Global restructuring has led NEC to select two U.S. plants for outsourcing. Not only that, the company reportedly expects to increase outsourcing of PCs sold to Europe as well as source more computers from Taiwan.

Still, NEC is handling the two U.S. plants differently. As part of a reorganization of NEC’s PC/server business, Packard Bell NEC is closing its operation in Sacramento, CA. That action was reported last month (Nov., p. 10), as was the effort to identify a manufacturing partner. Earlier this month, SCI Systems was named as the partner.

SCI will provide a full range of supply-chain services for NEC’s laptop and desktop computers sold to commercial customers in North America. NEC is pulling out of the retail PC market in the U.S. SCI will perform high-volume system build and test and North American distribution for fielded and new computers. As part of this agreement, SCI will purchase some manufacturing equipment assets located in the Sacramento operation and transfer them to an SCI facility in Huntsville, AL.

Note, however, that this agreement does not cover server production at the Sacramento site. According to a Packard Bell NEC spokesman, servers produced there will be sourced inside NEC from Japan and Europe.

NEC has taken a different approach with a plant in Hillsboro, OR (Oct. p. 8). Its NEC America subsidiary hopes to sell the 380,000-ft2 plant to a contract manufacturer, which would continue to produce NEC network equipment and automotive electronics.

Europe may provide a venue for further outsourcing at NEC. According to a Reuters report, an NEC executive expects more outsourcing of PCs sold in Europe as European demand for NEC laptops increases. Reuters also states that NEC produces about 90% of the PCs it distributes in Europe, which according to the news service, will account for $1.7 billion in PC sales this year.

Still, it’s not as though NEC is approaching outsourcing for the first time. Based on a report from the Asian Economic Daily News, Bloomberg News is writing that NEC intends to buy $630 million worth of products from Taiwan next year, an increase of 25% over 1999. These purchases will include two million laptops and PCs from First International Computer and Arima Computer of Taiwan, plus products sourced from Tatung.

Another Japanese OEM with a restructuring plan is Hitachi. The company has launched a medium-term business plan in which one of the main points is to transform Hitachi from a manufacturing company to a solutions provider. To make this transformation, “Hitachi will prioritize R&D and plant and equipment investment in the solutions and leading-edge devices business segments, and effectively utilize outside resources,” according to a company statement. Note the last part of the statement. Hitachi has confirmed that the term “outside resources” means outsourcing.

But Hitachi’s plant in Norman, OK, clearly wants to stay in business with a strategy to add contract manufacturing to the work done for Hitachi. Formerly dedicated to manufacturing for Hitachi Information and Telecommunication Systems Group, the 160,000-ft2 Oklahoma facility has already announced two EMS customers: ECCS (Tinton Falls, NJ) and Matthews Communications. The ECCS contract includes turnkey production of a RAID system, while Matthews will use the facility for turnkey manufacture of a new call management system. Originally set up to manufacture mainframe storage systems, the facility assembles as many as 60 different board configurations per week and ships about 60 Hitachi RAID systems per month.

The foregoing examples show that Japanese OEMs are willing to change, sell or eliminate manufacturing operations outside Japan. Now the question becomes: Will they apply the same rules to their facilities inside Japan? Outsourcing some products to Taiwan may be a way of bypassing this question.

The same question also applies to Japan’s telecom industry following the news that Nippon Telegraph and Telephone will cut 21,000 jobs over the next three years. According to the Associated Press, the job cuts will not involve layoffs. But they do signal that NTT intends to become more competitive. The world’s second-largest telecom company has long dominated Japan’s telecom industry. Earlier this year it was split into three pieces.

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Analyst Says Europe Is Hot

After recently visiting four major OEMs in Europe, analyst Randall Sherman is bullish on the European market for EMS. “I feel Europe is the hot spot right now,” says Sherman, president of New Venture Research Corp. He spoke with Alcatel, Ericsson, Nokia and Philips.

Still, the European market “is not quite the U.S. model,” Sherman points out. European OEMs “are not going to go that far” into outsourcing, he adds. Outsourcing in Europe is geared toward high volumes, says Sherman.

“Alcatel, for example, wants to build some boards. It does look like some new products will be outsourced, particularly if there are strong volumes,” he observes. Sherman cites switches and phones as candidates for outsourcing at Alcatel. He reports Alcatel is still in the process of evaluating its plants. According to Sherman, plants will be kept if they are needed for a particular country or for strategic reasons such as providing a proprietary technology.

For Ericsson, “the big concern is getting too dependent on their suppliers,” reports Sherman. He adds that the company is wondering if its suppliers are doing the best job possible and how that can be measured. Ericsson, of course, was one of the first European OEMs to outsource in a big way. Sherman says Ericsson is asking, “Now that we’ve done it, what are the risks of going too far with it?”

According to Sherman, Philips estimates that it’s about 50% outsourced. He puts Nokia at around that level or a little higher, say 60%. Alcatel, he figures, is at about 40%, but changing fast.

Perhaps the latest example of a major outsourcing deal in Europe comes from Fujitsu-Siemens Computers (see News on p. 3).

For more information, see www.newventureresearch.com


Another Italian CM Making Moves

Because the European market is at an earlier stage of outsourcing than in the U.S., the dynamics in Europe are different. Global CMs are not the only players benefiting from plant divestitures in Europe. Some OEM plants are going to European CMs. As a result, these regional CMs have the means to rapidly expand their footprint in Europe. Two good examples come from Italy. One company, IXTANT, has already appeared in MMI (Oct, p. 4); the other is new to these pages.

This newcomer is the Finmek Group, whose expansion has been fueled by acquisitions from the likes of Ericsson and Olivetti-Lexicon. Finmek follows a contract manufacturing strategy that focuses on three areas: board assembly and testing, precision mechanics and sheet metal for housings and frames, and systems build of electronic and mechatronic products. (Mechatronic usually refers to a mechanical system that relies on electronic control.) For systems build, Finmek can bring together the capabilities of its Electronic and Mechanics business units to manufacture a finished product. Out of 980 employees, more than 100 are engineers, reports Finmek.

Based in Padova, Italy, Finmek operates seven plants in Italy and one in Germany (see table). The group expects 1999 sales of $120 million and is forecasting close to $300 million for 2000. Finmek’s goal is to achieve sales of $500 million during 2001.

Information and communications technology represent 65% of Finmek’s activity. In this segment, major customers are Ericsson, Marconi Telecommunications, Siemens and Italtel. Finmek typically supplies them with boards and systems including cabinets for applications such as telephone switching. In the automotive market, which accounts for 20% of activity, major customers are Magneti Marelli, Sylea and Eaton. Remaining business is spread among the consumer market (Olivetti, Electrolux and soon the Merloni Group), electronic instruments (Tektronix and Necsy), energy systems (Invensys Group) and medical (Planmeca).

“We mainly face the competition of the major American contract manufacturers that are expanding their activity in Europe,” says Andrea Milan, sales and marketing director at Finmek. “Smaller local contract manufacturers do not represent a serious problem.”

Finmek Group was founded in 1993 through the acquisition of mechanical and plastics production in Padova from Necsy, part of the Italtel group. Elektromec, the first Finmek company, started contract manufacturing that year. In 1995, Finmek acquired the Hiross precision sheet metal division in Padova and the following year added an electronic production activity from Necsy. Then in 1997, Finmek started a greenfield operation called Italmek in Marcianise for PCB and sheet metal production.

This year, Finmek put its acquisition strategy into high gear with four deals reported done and others planned. In 1999, the company acquired an Ericsson production site for board assembly in Pagani; an Olivetti facility in Scarmagno to supply metal and plastics for printers and copying machines; Italtest, which produces automotive boards and subassemblies; and a Hagenuk operation in Kiel, Germany, for production of telecom terminal equipment.

Yet Finmek isn’t finished making deals this year. The company has planned two more acquisitions by year end. One is a sheet metal plant in the UK with 50 employees and expected sales of $4 million in 2000. This operation produces cabinets and racks for electronic equipment. The second acquisition target consists of an Italian system plant in the production of electric power control cabinets. Plant sales for 2000 are projected at $6 million, and 80 people work there.

What’s more, Finmek has other deals slated for early next year. With these additional moves, Finmek will have expanded outside of Europe. In Shanghai, China, Finmek plans to participate in a joint-venture plant dedicated to assembling and testing electronic and electric cabinets for the IT and telecom market. In Buenos Aires, Argentina, Finmek intends to partner in a joint-venture company to produce shelters for mobile telecom. Plans are that this company will operate plants in Argentina and Brazil. Plus in Italy, the company expects to acquire a system plant that assembles and tests telephone switching cabinets for a multinational OEM.

Finmek has embarked on a three-year plan to become a world leader in contract manu-facturing. In addition, the company aims to reinforce and expand value-added capabilities such as board design, product engineering, and final assembly and testing.

The company expects EBIT to be 4.25% for 1999 and 5.61% in 2000.

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News


Flextronics To Take Over Operation From Fujitsu-Siemens

Under a new agreement, Fujitsu-Siemens Computers (Amsterdam, The Netherlands) will outsource its advanced network server production in Paderborn, Germany, to Flextronics International (San Jose, CA).

The two companies will enter into a long-term contract whereby Flextronics will provide manufacturing capacity and logistics services to Fujitsu-Siemens. About 650 people employed by the Paderborn operation will join Flextronics. Estimated at about 300,000 to 400,000 ft2, the operation is due to become a Flextronics subsidiary on January 1, 2000, following approval by the necessary authorities.

This deal gives Flextronics a contract manufacturing presence in Germany, one of two European locations where Flextronics didn’t operate but felt were important (Nov. p. 4). Note that Flextronics will obtain a German site with its proposed acquisition of The Dii Group, but that site is a raw board facility.

“Flextronics will be able to service Siemens, a world leader in several product markets, on a global scale with world-class engineering and manufacturing services. The manufacturing facilities in Paderborn are a good match for Flextronics because they have years of experience in advanced process technology, a high level of product complexity and an extremely competent top-tier management team,” states Ronny Nilsson, president of Flextronics International, Western Europe.

For Fujitsu-Siemens’ fiscal 2000, server volumes are reportedly projected at 180,000 Intel-based units and 5000 enterprise-level Unix units.

Originally the main plant for Nixdorf Computers, the Paderborn factory was taken over by Siemens in 1990 when it acquired Nixdorf. The factory became part of Fujitsu-Siemens this year.

Fujitsu-Siemens represents a new joint venture between Fujitsu Ltd. and Siemens AG, who have combined their European computer companies. According to Business Week, Fujitsu is supplying notebooks and consumer products, while Siemens focuses on servers. Fujitsu also brings mainframes to the venture.

More on the Flextronics-Dii deal…In a letter to customers, Flextronics’ chairman and CEO Michael Marks has explained in some detail the reasons for its planned acquisition of The Dii Group (Niwot, CO). (See Nov., p. 1 for an initial report of this deal.) The following is a summary of portions of that letter.

Many of Dii’s locations can benefit Flextronics immediately. In China, Dii-Dovatron operates within walking distance of Flextronics facilities, which are at capacity. In Europe, Dovatron has excellent capabilities in Ireland, which many Flextronics customers have been requesting, and in the Czech Republic, which will add needed capacity to Flextronics’ operations in Hungary.

In Guadalajara, Mexico, Flextronics needs more management talent, and the company expects to retain the Dovatron management group in Mexico as a third team there. In the U.S., Dovatron operates in several locations that Flextronics desires. They include Los Angeles, Colorado, New York and Florida. Flextronics has wanted to increase penetration of the U.S. market.

The deal also increases Flextronics’ engineering capabilities. With the addition of Dii’s ASIC and gate array development group in San Jose, Marks says Flextronics will have one of the most robust global engineering groups in the industry.

PCB fab offerings will increase as well. While Flextronics’ Astron unit specializes in miniaturized PCBs and operates only in Asia, Dii-Multek builds much larger and more complex PCBs with sites in Asia, Europe, North America and Brazil. Combining these operations will create a top-ten PCB group, writes Marks, with possibly the best global footprint and the best engineering in the industry. The Multek capability will allow Flextronics to more closely integrate the supply chain for customers with more complex products.

Finally, the deal will allow the company to substantially expand the depth of its management team. Marks listed this as the most important reason for making the deal.

EMS business units coming and going…Labgear Ltd. (Cambridge, UK), a maker of RF TV signal distribution products, has launched an EMS division, according to a newsletter from PCIF, a UK-based trade association. In the past, the company has done EMS work for customers including British Telecom, Philips, Taylor Nelson AGB and Thomson Multimedia….Icron Systems (Vancouver, Canada), a developer of new Universal Serial Bus technology, has agreed to sell its EMS subsidiary, Icron Manufacturing, to a group of investors for Cdn$1.68 million. The group is led by Doug Kind, the company’s founder and former president and CEO.

Celestica Expands Repair Business

Another top-tier company is expanding its after-sales service offerings by acquisition (Oct., p. 2-3; July, p. 2-3). Celestica (Toronto, Canada) has acquired one repair oper-ation and intends to obtain another.

The company has acquired Dallas, TX-based EPS Wireless, which specializes in the repair and refurbishment of mobile and wireless products, including mobile phones. What’s more, Celestica has signed a letter of intent to acquire ICL’s repair operations that are also located in Dallas.

Founded in 1987, EPS was acquired in 1996 by Preferred Networks Inc. (Atlanta, GA), which has operated EPS as a wholly-owned subsidiary. PNI says this transaction will allow it to focus on core activities.

EPS resides in a 60,000-ft2 facility employing about 300 people, who will be offered jobs with Celestica.

ICL’s operation focuses on the repair of PCBs, scanners, point-of-sales terminals, handheld units, peripherals and monitors. The 22,000-ft2 operation has about 100 employees, who will also be offered jobs with Celestica. Scheduled to close by year end, this acquisition includes a repair services agreement with ICL, a global IT services company. This is not the first time ICL and Celestica have joined in a deal. Celestica acquired ICL’s contract manufacturing subsidiary, Design to Distribution Ltd., in 1997.

“These announcements demonstrate Celestica’s commitment to strategically expanding the breadth and depth of its existing global repair service offerings in response to customer demand,” states Eugene Polistuk, president and CEO. “Global electronics OEMs are looking for EMS partners capable of providing significant value-added services throughout the life cycle of their products. These additions not only expand the geographical coverage and capacity of our already strong repair operations but also enhance Celestica’s Repair Services management team.”

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NatSteel Electronics in Two Ventures

NatSteel Electronics Ltd. (NEL) of Singapore has entered into a joint venture with Pacific City International Group (PCI), reportedly the third largest distributor of IT products in China, and has formed a strategic alliance with Taiwan’s Accton Technology, an ODM/OEM provider of networking equipment.

The alliance with Accton is expected to bring in revenue of $1 billion over the next three years. Accton will contribute design, software development, marketing services and logistics expertise for switches, hubs, adapters, transceivers, routers and other internetworking devices. NEL in turn will provide prototyping, mass production, distribution as well as after-sales support services on a global scale. The alliance will give Accton increased flexibility in meeting its volume production needs.

Lately, NEL has been pursuing an ODM (original design manufacturer) strategy with investments in two other ODM partners this year (Oct., p. 3).

NEL said the alliance would enable it to gain significant share in the communication segment.

The joint venture with PCI combines the distribution strength of PCI and the manufacturing and financial capabilities of NEL to build a business model for configure-to-order and build-to-order in China. NEL and PCI will each take half interest in the venture with PCI agreeing to buy an estimated S$1 billion (about $594 million) worth of goods from the venture over the first three years. NEL will invest $11 million in equity.

Next year, the venture plans to start work on BTO/CTO assembly plants in the Guangzhou and Shanghai free trade zones. These plants will offer BTO/CTO plus distribution logistics in China. NEL’s Shenzhen operation will supply PCB assemblies to the BTO factories. Building products in these factories saves on import taxes, reports Bloomberg News.

Another alliance…Manufacturers’ Services Ltd. (Concord, MA) has formed a strategic alliance with Hybricon Corp. (Ayer, MA), a designer and manufacturer of backplanes, sub-racks and powered enclosures. The idea is to combine Hybricon’s packaging design, simulation skills, prototyping and packaging products with MSL’s design services. “Hybricon’s expertise in mechanical and backplane design along with its robust designs for CompactPCI and VME64x enclosures will provide our customers with industry-standard, highly scaleable packaging solutions that save critical time and resources early in the product development cycle,” states Ed DeJesus, MSL’s VP of engineering and design services.

Deals done…Solectron (Milpitas, CA) has completed its acquisition of SMART Modular Technologies (Fremont, CA). This deal was reported earlier (Sept. p. 1)….SCI Systems (Huntsville, AL) has closed on the previously announced acquisition of TAG Manufacturing (San Jose, CA), a supplier of enclosures to OEMs and CMs. This transaction is “a significant first step in the expansion of SCI’s capabilities” in the enclosure segment, says SCI. Thomas Grant, TAG’s president and founder, will stay on to run the TAG unit as an SCI VP. …SMTEK International (Thousand Oaks, CA) has sold its raw PCB operation, Irlandus Circuits Ltd. in Northern Ireland, to a local management group for about $4.5 million in cash. PCB sales to external customers contributed $8.3 million out of $59.5 million in total fiscal 1999 revenue.

Able Reappears

After being bought by GET Manufacturing in 1997, Able Electronics disappeared as an independent contract manufacturer. Now Able Electronics is back in the form of a new EMS company.

For its launch, the new Able has purchased the former Silicon Valley operation of GET, a CM acquired by Jabil Circuit (St. Petersburg, FL) in September. Jabil did not need this operation in Mountain View because the company already had a new plant in San Jose with much more space.

“We’re very excited about the opportunity to relaunch Able and retain many of the same highly skilled associates that made Able and GET successful in the past,” states Peter Dennis, Able president and COO. “At a time when smaller EMS companies are being gobbled up by larger entities, we are reclaiming our roots and focusing on providing the highest levels of personalized customer service.”

Of the new company’s 139 employees, 102 had worked at the old Able with an average employment of six years.

The new Able’s core management team consists of both new people and former GET employees. President and COO Dennis comes from Kent Electronics, where he last served as director of strategic marketing on the OEM components side. Able’s chairman and CEO is Dave Orosz, who founded and owned Pyramid Electronics, which Kent acquired. As a 90% owner in Able, Orosz is providing financial backing for the company. Orosz and Dennis had worked together previously at Pyramid. Coming over from GET are Tish Kelly, Able’s director of marketing and associate relations; Eldon Regua, director of customer operations; Rich Rowley, director of finance/controller; and Paul Sperry, director of manufacturing operations.

Able offers full turnkey manufacturing through box build from GET’s former 43,000-ft2 facility, which includes three SMT lines. The CM is promoting its ability to handle low-volume, high-mix work. “This model reinforces our ability to do medium to high volume when it presents itself,” says Dennis. Able is also emphasizing customer service, supply-chain management and adding value throughout the process.

With some minor exceptions, Able retained GET’s customers that were using the Mountain View facility. Indeed, business with existing customers is so good that Able is not actively soliciting new customers at this time. “With the growth of our current customer base and what we have on our plate right now, we will grow at ahead of the industry,” says Dennis. The CM is running at a $17- to $20-million rate.

Able also wants lower cost alternatives to its Silicon Valley location. So the company plans to be operational in Mexico by April 1, 2000, and is leaning toward a greenfield approach. China is another objective, and Able is leaning toward an alliance there.

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New programs…SCI Systems has disclosed that it has landed a program to manufacture the new Webpc for Dell. Also, PairGain Technologies (Tustin, CA), which sells DSL networking systems, plans to move manufacturing of its high-volume products to SCI in Monterrey, Mexico. The transition is due to be completed by the end of Q2 2000. This move will allow Pairgain’s headquarters personnel to focus entirely on making its newer, leading-edge systems. The company also cited the need to manufacture at reduced costs…. Reuters is reporting that Motorola plans to start mobile phone production in Hungary through both Flextronics and JIT Electronics (Singapore). According to the news service, JIT is constructing a $30-million facility in Budapest. Reportedly, the facility will contain 200,000 ft2….If Flextronics can move further into the raw PCB business, then a PCB supplier can look for more value add in contract manu-facturing. Integrity Communications (Richmond, VA) has selected Viasystems, known as a global PCB fabricator, as Integrity’s primary contract-manufacturing partner for its broadband wireless point-to-multipoint systems. Viasystems Technology Corp. (Richmond, VA), a subsidiary of Viasysems Group (St. Louis, MO), is equipped to produce large volumes of PCBs and fully assembled products such as Integrity’s system components. Not only that, earlier this year Viasystems acquired PAGG, a contract manufacturer in Milford, MA (April, p. 4).

Siemens EMC announces four EMS customers…In Johnson City, TN, the Electronics Manufacturing Center (EMC) of Siemens Energy & Automation will provide Omnipoint with turnkey PCB assemblies for wireless data modules as well as build, test and ship final product to Omni-point’s global customers. For Panja, Siemens EMC will supply turnkey PCB assemblies for products including master information control devices within home control systems. Thirdly, Siemens EMC will assemble PCBs for multimedia digital IRDs (integrated receiver decoders) from Wegener Communications. Finally, EMC will provide PCB assemblies for Woodward Automotive Products.

Still more new programs… Aimtronics (Delta, B.C., Canada), a subsidiary of AimGlobal Technologies (Austin, TX), is starting production on a Cdn $43.5-million contract from E-Zone Networks. Production of E-Zone’s health management equipment is taking place in Aimtronics’ Brockville, Ontario, facility….Tiara Networks (San Jose, CA), a supplier of multimegabit Internet access and aggregation solutions, has chosen Isis Surface Mounting, also in San Jose, as Tiara’s turnkey manufacturing partner. Isis’ expansion to 130,000-ft2 will support Tiara with mechanical assembly, box build, order fulfillment and logistics….EFTC (Denver, CO) has been awarded new business from Acres Gaming, a supplier of computer systems and products to casinos. The CM expects the Acres account to be worth $7.8 million in 2000, up from the current level of about $2 million a year. EFTC will be providing card, cable and box-build assembly services. Other new programs include one related to secure government T1 lines, estimated at $7 to $10 million in 2000, and about $2-million worth of work that Bayer is transferring from another CM. Under another new contract, EFTC will provide card and box build assembly for AT&T Wireless Aviation Communications Division products related to network control of air phones….LaBarge (St. Louis, MO) has landed a contract of about $7.6 million from Northrup Grumman (Baltimore, MD) to produce 516 infeed assembly units used for postal sorting equipment. Full production is scheduled to begin early next year and continue through November 2000 at LaBarge’s Huntsville, AR, facility. The company will also produce $2.7 million worth of radar PCB assemblies for Lockheed Martin Ocean, Radar and Sensor Systems (Syracuse, NY)….Publicly held Meltronix (San Diego, CA), formerly Microelectronics Packaging Inc., will manufacture microelectronic digital imaging modules for Silicon Film Technologies as well as microelectronic modules for Sundstrand Aerospace.

Benchmark Sues J.M. Huber

Also faces class action suits

Benchmark Electronics (Angleton, TX) has filed suit against J.M. Huber Corp. (Edison, NJ) in connection with Benchmark’s August purchase of AVEX Electronics operations from Huber (July, p. 1). The suit alleges breach of contract, fraud and negligent misrepresentation and seeks unspecified damages. At press time, Huber said it had not yet seen the suit and so was unable to comment.

Meanwhile, at least four law firms have announced class action lawsuits on behalf of buyers of Benchmark stock from Aug. 10 through Oct. 21. The suits allege that Benchmark and certain of its officers made false and misleading statements in violation of federal securities laws. These suits will be combined into one class action.

Benchmark believes it has made all required disclosures on a timely basis and intends to defend itself in court.

Some financial news…For Solectron’s fiscal Q1 ended Nov. 26, the company reported sales of $2.50 billion, up 29% year over year. Net income increased 53% to $98.0 million and included an after-tax accounting charge of $3.5 million. Solectron says it had about $100 million in demand that it could not commit to in the quarter due to component shortages….Celestica and Flextronics have announced two-for-one stock splits….Jabil Circuit has filed a shelf registration allowing it, from time to time, to issue various securities totaling up to $750 million….For the six months ended Sept. 30, JIT Holdings Ltd. (Singapore) reported sales of S$455.5 million, up 62% from a year earlier. Profit increased 13% to S$10.5 million. According to Bloomberg News, Hewlett-Packard accounted for 53% of sales, while Motorola represented 38%. Kulicke & Soffa Industries, a maker of semiconductor assembly equipment, was reported as a new customer….Western Electronics (Boise, ID) has taken on DBSI as an equity partner to fund rapid expansion of the company’s service and production capabilities. A 22-year-old company, Western operates four divisions in electromechanical assemblies, PCB assemblies, postmolded cables and wire harness assemblies. John Wasden, former president and chairman of Western, will remain as VP of business development and a board member. Var Reeve, recently named CEO, will add the duties of president and board member. Wasden says the company intends to make acquisitions….For the quarter ended Oct. 31, SigmaTron International (Elk Grove Village, IL) earned net income of $733,104 on sales of $27.2 million….ECS Industries (Tuscon, AZ) has engaged Capital Active Funding as a new source of capital. In October, the CM entered into a joint inventory purchase agreement with its largest customer for six months.

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CEO Dies Suddenly

David Fradin, Ph.D., president and CEO of IEC Electronics (Newark, NY), died unexpectedly this month. IEC’s chairman Russell Stingel, who had retired as CEO in September, has been named interim CEO.

IEC will start searching immediately for someone to step in as president and CEO.

“David’s death was a sudden shock to all of us at IEC as well as our shareholders, clients and suppliers. We all join together to express our deepest sympathies to his family. David was instrumental in assisting IEC in redirecting itself during the past two years. Although this has been a difficult transition, we believe that his efforts are beginning to bear fruit, and that this will be one of the many legacies that he will leave behind,” states Stingel.

Dr. Fradin joined IEC in June 1997 and was well known as former CEO and president of EMD Associates, which was acquired by Benchmark.

People on the move…SCI has appointed Pete Scheffler as executive VP, Atlantic Group, and Tom DiClemente as executive VP, Pacific Group. Both positions are new. Scheffler, who joined the company in 1994, will be responsible for the PC, Southeast, Northeast and European Divisions. DiClemente, formerly an executive at AMP, will handle the Technology, Mexican, Western and Asian Divisions….Flextronics has hired Steve Martson as its new senior VP and chief procurement officer. He joins the company from Compaq, where served as VP and chief procurement officer of corporate procurement….Pemstar (Rochester, MN) has appointed Steve Petracca as executive VP of worldwide sales and marketing. He came to Pemstar with its acquisition of Bell Microproducts’ Quadrus division. Petracca heads Pemstar’s new worldwide sales and marketing organization, based in San Jose, CA. The company also promoted Chris Lineberry to VP and GM of San Jose operations….Joe Skarupa has joined APSCO International (Perry, OH) in the newly created position of VP of sales and marketing. He comes from Ohio-based Inovision Radiation Measurements, where he headed up worldwide sales. APSCO is billed as Ohio’s largest EMS provider with customers including Lincoln Electric and Xerox….Equipment maker Amistar (San Marcos, CA) has named Michael Saloka as VP and GM of Amistar Manufacturing Services, Amistar’s contract manufacturing business. Previously, he served as senior VP at Unit Instruments, where he ran business development, international operations and worldwide service….EFTC has promoted John Briant to VP of materials, quality and process management. He joined the company in 1998 from AlliedSignal. The CM has also appointed Guido Mardones as director of operations for its Northeast Operations in Wilmington, MA. He joins EFTC from Compaq, where he served as business manager for Compaq’s worldwide PCBA operations….Phoenix International (Fargo, ND), which specializes in control, display and sensor products, has appointed Daryl Schloz as GM of its Springfield, IL, division. He comes from John Deere.

CEO honors…Electronic Business has selected Dr. Ko Nishimura, Solectron’s chairman, president and CEO, as the magazine’s Top CEO of 1999….Allen Berning, founder and CEO of Pemstar, has been named the 1999 National Ernst & Young Entrepreneur Of The Year in the Emerging Entrepreneur category.

Opting for e-commerce tools… Flextronics has chosen Calico eSales from Calico Commerce (San Jose, CA) to provide a web interface that will enable Flextronics customers to configure, price and order products. …MATCO Electronics Group (Vestal, NY) has fully deployed PartMiner’s online sourcing tool to research part availability and pricing. The CM also plans to purchase components via Partminer’s Electronic Commerce Free Trade Zone, when it becomes available.

Buying other solutions…Jabil Circuit has selected USDATA’s manufacturing execution system, Xfactory, for Jabil’s global facilities. USDATA is based in Richardson, TX. The CM will also use FABmaster software from FABmaster S.A. (Grenoble, France) for designing test fixtures and programming in-circuit and flying probe testers on a worldwide basis….Celestica has chosen Tecnomatix Technologies Ltd. (Herzliya, Israel) to provide its Unicam New Product Introduction suite of tools and services to 16 Celestica sites….Pemstar has signed a global license with Agile Software (San Jose, CA) for product data management software….EFTC has also selected Agile for PDM; for advanced planning and scheduling, the CM will use Rhythm Factory Planner from i2 Technologies (Irving, TX).

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Copyright 1999 JBT Communications

MMI November 1999

MMI January 2000

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