72.6 F
San Diego
Saturday, Jul 13, 2024

Jabil Circuit Shutters Poway Plant, 143 Workers Losing Jobs

Jabil Circuit Inc. is closing its Poway contract manufacturing plant and recently began laying off its 143 employees.

Calls to the company were referred to Jabil’s headquarters in St. Petersburg, Fla., where a spokeswoman said the only information the company is releasing is contained in its regulatory filings.

Last July, Jabil, a $10 billion electronics manufacturer, undertook a corporate restructuring “to better align the company’s manufacturing capacity in certain higher cost geographies.”

At that time, the company did not reveal what plants or jobs would be affected, but in April Jabil notified the state Employment Development Department it was closing the Poway facility at 13550 Stowe Ave., with final closure set for September.

The notice is required if companies are cutting more than 50 jobs. Jabil has 143 employees at the site, with the majority involved in electronic assembly and testing, according to the document provided by the EDD.

According to local industry sources, Jabil made electronic medical devices for larger manufacturers. Like other companies, the higher costs associated with labor here is prompting Jabil to move the work to foreign locations for a fraction of the cost.

Low-Margin Products

“There’s been a large amount of manufacturing of low-margin products going offshore for years, and that’s likely happening with this company,” said Alex McKay, chief executive of Arma Design, a San Diego electronics product design firm.

McKay said the area once supported a larger number of contract manufacturing plants, including some operated by the largest manufacturers in the nation.

However, in the last several years, plants have been acquired and shuttered, with the work going to Asia and Mexico.

It appeared that the reason behind the acquisitions of the smaller, independent plants was to grab customers and then move the work offshore, McKay said.

According to the company’s Web site, Jabil is the third-largest electronics manufacturing services provider in the world and has 77,000 employees.

It operates in 20 countries, including China, Malaysia, Singapore, India, Taiwan and Japan. Last month, Jabil recently announced the construction of a new plant in Ho Chi Minh City (formerly Saigon) in Vietnam.

The plant will initially cover 55,000 square feet, but Jabil can expand it to 120,000 square feet. It is expected to open this month.

“We are developing Vietnam as a production-for-export location. Vietnam offers a globally competitive cost base, a strong work force and provides good balance to our Asia footprint,” said Bill Muir, Jabil regional president, in a news release.

According to a September 2006 report filed with the Securities and Exchange Commission, Jabil estimated the costs associated with its restructuring will run between $200 million to $250 million. About $81.2 million of that includes employee severance and benefits, according to the SEC document.

In January, Jabil acquired Taiwan Green Point Enterprises Co. Ltd., which has seven plants in China, and one each in Taiwan and Malaysia.

In its most recent quarter that ended Feb. 28, Jabil reported net income of $13.9 million on revenue of $2.9 billion. That compared to net income of $69 million on revenue of $2.3 billion for the like quarter of 2006.

Shedding Jobs

San Diego has been shedding manufacturing jobs at an alarming rate in recent years, according to reports compiled from a variety of sources.

Last month’s EDD report stated the region lost 1,400 manufacturing jobs from April 2006 to this April. The biggest category of losses came from computer and electronic products manufacturing where 1,100 jobs were shed.

As of April, the region supported 102,800 manufacturing jobs, down 1.3 percent from the level it had in April 2006.

In 2006, according to Manufacturing News Inc. based in Evanston, Ill., San Diego lost 2,150 manufacturing jobs.

While disturbing, the numbers of recent losses don’t compare with the heavy losses the region sustained in the early 1990s when the defense and aerospace sectors were decimated by job cuts inflicted by major employers, including General Dynamics, Lockheed Martin, and Hughes.

From 1990 to 1995, the area lost 27,390 jobs related to aerospace and defense, according to a 1996 report by the San Diego Regional Chamber of Commerce.

Also, industry observers say San Diego has done fairly well in realigning its economy through its emphasis on technology and telecommunications manufacturing, work that cannot be easily duplicated in the Third World.


Featured Articles


Related Articles