FLEXTRONICS
Further manufacturing acquisitions / Xerox business machines / System strategy
The electronics supplier group, Flextronics (Singapore; www.flextronics.com) – see Plasteurope.com 20, 2001 “Communications Technology” – is still pursuing its expansion drive. On 27 September, the company announced the acquisition of a Hewlett Packard (HP; www.hp.com) facility in Singapore with 250 employees, for the production of large-format printers. Then, on 2 October, came reports of a much bigger deal. For a sum of USD 220 bn, Flextronics is taking over the entire production of medium-sized office machines from Xerox Corp. ( www.xerox.com), with 3650 employees, for the next five years. This division has sales of USD 1.5 bn, and the figure is still expected to reach USD 1 bn after optimisation.
Only the five locations that fit the Flextronics´ strategy of central production sites are being acquired. The main facility is located in Mexico, with 2,000 employees engaged in the production and assembly of copiers for the North American market. A smaller unit in Toronto, Canada, has the necessary expertise for producing parts for the covers of the machines. The plant in Malaysia is the former Tectronics site for the production of ink-jet printers, which was acquired by Xerox at an earlier date. Assembly for the South American market is performed in the Brazilian federal state of Sao Paolo. In Europe, operation of the Dutch assembly site at Venray is being continued, since this is in the close vicinity of one of Flextronics´ big distribution hubs.
Once a producer of circuit boards and integrated circuits, Flextronics, has now moved up to become the clear market leader for “Electronic Manufacturing Services” (EMS), having overtaken its main rivals Solectron, Sanmina-SCI, Jabil Circuit and Celestica for the time being. The EMS market is currently experiencing an unparalleled outsourcing boom. The market volume is set to increase from USD 100 bn to 400-500 bn by 2005. Flextronics is intending to share in this increase by gaining at least an extra USD 15 bn of sales, which would make the company one of the most important tier-1 groups overall – including by comparison to the automotive sector. This year, Flextronics has been awarded some two-thirds of the current outsourcing orders from the OEM industry. The company has reached this position through its consistently-pursued strategy of integrating design, production and logistics.
Producing parts in low-wage countries wherever possible is only one aspect of cost reduction. The Flextronics “design for manufacturing systems” marks a further contribution. Additional key savings in stockholdings and transport routes are brought about by the intelligent interlinking of logistics flow both to and from the company´s production hubs all over the world. The company has developed its own “Simflex” software which it uses to work out the most economic logistics routes from points of demand anywhere in the world back to the material source. The full-scale control of the delivery chains that is achieved in this way naturally has a positive impact on purchasing too, and this is likewise monitored and steered on a worldwide basis through central group software.
Only the five locations that fit the Flextronics´ strategy of central production sites are being acquired. The main facility is located in Mexico, with 2,000 employees engaged in the production and assembly of copiers for the North American market. A smaller unit in Toronto, Canada, has the necessary expertise for producing parts for the covers of the machines. The plant in Malaysia is the former Tectronics site for the production of ink-jet printers, which was acquired by Xerox at an earlier date. Assembly for the South American market is performed in the Brazilian federal state of Sao Paolo. In Europe, operation of the Dutch assembly site at Venray is being continued, since this is in the close vicinity of one of Flextronics´ big distribution hubs.
Once a producer of circuit boards and integrated circuits, Flextronics, has now moved up to become the clear market leader for “Electronic Manufacturing Services” (EMS), having overtaken its main rivals Solectron, Sanmina-SCI, Jabil Circuit and Celestica for the time being. The EMS market is currently experiencing an unparalleled outsourcing boom. The market volume is set to increase from USD 100 bn to 400-500 bn by 2005. Flextronics is intending to share in this increase by gaining at least an extra USD 15 bn of sales, which would make the company one of the most important tier-1 groups overall – including by comparison to the automotive sector. This year, Flextronics has been awarded some two-thirds of the current outsourcing orders from the OEM industry. The company has reached this position through its consistently-pursued strategy of integrating design, production and logistics.
Producing parts in low-wage countries wherever possible is only one aspect of cost reduction. The Flextronics “design for manufacturing systems” marks a further contribution. Additional key savings in stockholdings and transport routes are brought about by the intelligent interlinking of logistics flow both to and from the company´s production hubs all over the world. The company has developed its own “Simflex” software which it uses to work out the most economic logistics routes from points of demand anywhere in the world back to the material source. The full-scale control of the delivery chains that is achieved in this way naturally has a positive impact on purchasing too, and this is likewise monitored and steered on a worldwide basis through central group software.
08.11.2001 Plasteurope.com [16378]
Published on 08.11.2001