It was another year of flat employment for the largest contract electronics makers in Orange County.
The 17 companies combined for 2,763 employees through July, three fewer than a year ago, according to this week’s Business Journal list.
It’s the second-straight year the sector has reported a nominal drop. The last sizable gain occurred in 2011, when employment increased 4.7% during the greater economic recovery.
It appears the local sector, like the industry nationally, hasn’t recovered since the height of the recession in 2009, when local employment nosedived by 12%.
The local companies make printed circuit boards and other products for computers, consumer electronics and medical devices. Some serve niche markets for products with military, aerospace and industrial uses.
Products made here end up in a wide variety of devices, including computers, aircraft, smartphones and medical gear.
Many contract electronics makers started here decades ago to serve a single customer each. They have stayed competitive by designing and building prototypes or producing small batches on quick turnarounds for a more diverse customer base.
They compete against a bevy of Asian competitors that produce less-complex boards made in large volumes on the cheap.
Five companies on the list added jobs in the 12 months through July, and three reported shedding some positions. Five companies were flat, and four others didn’t provide information from the prior year for comparison.
This year’s list featured no newcomers, and 13 rankings were unchanged from a year ago, including the top four and the bottom five companies.
Express Manufacturing
• Perennial No. 1, Santa Ana-based Express Manufacturing Inc., which makes electronics used in the telecommunications and gambling industries, maintained its top ranking.
The company, known as EMI, added five jobs in the past year and now employs 785 workers.
• No. 2, TTM Technologies Inc., which makes circuit boards for the communications, industrial, medical and consumer electronics sectors, added three employees here in the past year for a total of 423.
The Costa Mesa-based company has steadily cut production capacity in China, its main manufacturing hub, due to dropping demand in its nonmobile business. Known customer Apple Inc. has also seen iPhone sales sag. The Business Journal in March reported that the company signed a deal with Shengyi Technology Co. to sell TTM’s 70.2% stake in a 190,000-square-foot plant in Donguann, China, for about $113 million, while TTM acquired Shengyi’s 20% stake in a nearby 650,000-square-foot plant for roughly $29 million.
The companies had co-owned both plants, which primarily manufacture traditional printed circuit boards.
The deal “modestly” reduced TTM’s production capacity in China, according to analyst Matt Sheerin, managing director of equity research in the New York office of St. Louis-based Stifel Financial Corp.
He said the company’s response was appropriate, given the market conditions.
“That’s fairly important, given weak demand in Asia in their nonmobile business, like computing, telecom and the industrial market,” Sheerin said at the time.
TTM’s production in China was running at about 65% of capacity, but it should move closer to 80% following the swap, according to Sheerin.
TTM, known to supply Apple with components for iPhones and iPads, gets about 14% of its $1.3 billion or so in annual revenue from the Cupertino-based company.
It’s the largest printed circuit board maker in the U.S., a title it could lose this year following No. 3 Viasystems Group Inc.’s $228 million buy of Anaheim-based DDi Corp. last year.
The Business Journal estimates St. Louis-based Viasystems added about 360 workers in Anaheim at the time of the deal in June 2012, although it likely cut some positions since then.
The combined company had 14,128 employees and $1.15 billion in sales at the end of 2012, according to its annual report filed with the Securities and Exchange Commission.
M-Flex
• Anaheim-based Multi-Fineline Electronix Inc., better known as M-Flex, moved down one spot in the rankings to No. 12 after shedding six jobs, for a total of 54 employees in OC. The 10% drop was the biggest local decrease on the list.
The company, which sold its headquarters to DDi early last year, relocated to the Irvine Spectrum after the sale.
M-Flex, also known to supply components to Apple, has faced steep sales declines and mounting losses this year as it reduces inventory and production.
Its revenue in the June quarter fell to $136.1 million, down 20% from the same period a year ago. It reported an adjusted loss of $18.5 million, compared to an adjusted profit of $4.3 million a year earlier.
The company projects to regain profitability in the December quarter as it seeks a more diverse customer base, according to Chief Executive Reza Meshgin.
“Our customer relationships are strong, and we are aggressively pursuing new customer and product opportunities to diversify our revenue streams and support our longer-term growth objectives,” he said in the company’s June quarter earnings announcement.
M-Flex cut about 4,000 employees companywide in the past 12 months for a total workforce of about 12,000. The bulk of its workers remain in China. The 25% drop was by far the steepest companywide decrease on the list.
The cuts were primarily responsible for shrinking companywide employment on the list to 105,043, down 2.6% from a year ago.
Download the 2013 OC’s LARGEST ELECTRONICS MAKERS list (pdf)
