Sanmina-SCI to Close Malaysia Plant, Lay Off 800 | Print |  E-mail
Written by Mike Buetow   
Thursday, 01 November 2012 00:45

SAN JOSE -- Sanmina-SCI will close one printed circuit board fabrication plant and cut staff at another, taking nearly $12 million in charges as a result.

The contract electronics manufacturer said it would its factory in Kuching, Malaysia, reducing its number of PCB plants to five worldwide.

The 250,000 sq. ft. factory in the Sama Jaya Free Industrial Zone, employs more than 1,000 workers. Of that, at least 800 reportedly have been laid off. The decision likely took local officials by surprise: Assistant minister of industrial estate development Datuk Peter Nansian had said last week that the plant would stay open.

"This was a difficult decision, but one that we believe positions us for better financial results in both the short and long term," said CFO Bob Eulau. "Once we complete this transition, we will have eliminated approximately $3 million to $5 million in costs on a quarterly basis. The payback period for this closure should be about six to nine months."

Sanmina-SCI's addition of a second facility in Wuxi, China, which is now coming online, made the moves possible, Eulau said. "We feel that we can compete on a global basis from (Wuxi). The supply chain infrastructure is outstanding and we have an experienced team in place."

Sanmina will relocate equipment from Malaysia to China and will save an estimated $20 million to $22 million in capital expenses.

The company has also initiated a restructuring at another facility, bringing the total restructuring costs for the two facilities to $11.9 million.

Sanmina-SCI plans to leave certain technology engineering staff in Malaysia. The company will also keep open its EMS facility. According to Wamsi Mohan, an analyst at Bank of America Merrill Lynch, the Malaysia operations combined for roughly 5% of Sanmina-SCI's overall revenue, or about $304.5 million.

CEO Jure Sola said Sanmina-SCI's circuit board and backplane operations are expected to do better in 2013 than n 2012.

 

 

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