Sanmina closed due to relocation to China


HELP US, PLEASE: Retrenched workers demand that the state government step in to help them obtain better retrenchment benefits during a protest in Samajaya. — Photo by Chimon Upon

KUCHING: The closure of Sanmina-SCI Corporation (M) Sdn Bhd, Kuching (Sanmina-SCI) was the result of its San Jose headquarters’ decision to cut cost and move its operations to its new facility in Wuxi, China.

In a full transcript of Sanmina-SCI’s report on fourth quarter fiscal yearend 2012 earnings made available on line by Seeking Alpha, a Stock Market News, Opinion and Analysis specialist, its CFO Bob Eulau said the closure of the Kuching facility would help to cut cost by USD3 million to USD5 million on a quarterly basis.

“This was a difficult decision, but one that we believe positions us for better financial results in both the short and long term,” said Eulau.

The transcript which recorded real time discussions on Oct 31 also revealed that the decision to expand its printed circuit board manufacturing capacity in Wuxi China was made a couple of years ago and that an experienced team has been in place in Wuxi.

“With this closure, we were able to transfer a significant portion of the equipment in that factory (Kuching) to our new building in China.

“Our estimate is that we are saving approximately USD20 million to USD22 million.

“Once we complete this transition, we will have eliminated approximately USD3 million to USD5 million in costs that would have continued to be incurred on a quarterly basis. The payback period for this closure should be about six to nine months.”

The reports also quoted Wamsi Mohan, an analyst at Bank of America Merrill Lynch, who was among nine analysts present at the discussion posing the question to Eulau with regard to the closing of the Malaysian facility: “Your Malaysian footprint was about 5 per cent of your revenues; are you completely closing the Malaysian facility or is it a subset of that facility?”

To which chairman/CEO of Sanmina Jure Sola replied that the company was leaving some technology engineering group there that would be working on some research and development.

“We are not going to be manufacturing printed circuit board at that factory in the future. It’s a really high technology product, and based on present demand and future demand, we believe we can provide a better solution from China.”

Sola added that Sanmina would continue to have an integrated manufacturing facility in Penang.

Meanwhile, a check with the Market Watch of Wall Street Journal showed Sanmina-SCI Corporation’s shares surged more than 12 per cent yesterday, to US$8.54 after it reported its fiscal fourth-quarter earnings.

WE DESERVE MORE: Retrenched workers lament that the compensation received is too little for them to move on.

“Sanmina also said it had launched a restructuring plan that would affect two of its manufacturing facilities, but didn’t say how many jobs,” said the report.

The closure of Sanmina-SCI Kuching facility started on Tuesday and by Wednesday, more than 800 out of its 1,077 employees here had been retrenched.

It is claimed that the global electronics contract manufacturer did not explain the reasons for retrenchment nor prepared its workers mentally before distributing ‘loss of office’ letters to those affected.

On Wednesday, discontented laid-off workers gathered outside its Kuching premises at Samajaya Industrial Zone here, expressing their grudges and demanding better compensation.

Yesterday at 8am, a peaceful and organised protest, involving as many as 200 former employees, was staged with banners and placards, demanding for more compensations and humane treatment of workers.