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Contract Electronics

The county’s largest contract electronics makers,the hired guns of the technology industry,employ more than 3,360 people quietly making circuit boards, defense electronics and networking gear here.

That’s according to the Business Journal’s first list of contract electronics makers operating here.

The list includes companies that aren’t as well-known as the customers they make gear for, such as Hewlett-Packard Co., Cisco Systems Inc. and Boeing Co.

We decided to start a list for contract electronics makers because of their relative size here. And they seemed out of place alongside the likes of Western Digital Corp. and Gateway Inc. on our computer products list.

Contract electronics makers also serve as an undercurrent of the tech sector. After cutbacks during the downturn, the companies on the list posted a gain in jobs for the past year, subtracting out big cuts at the largest player here.

No. 1 Foxconn Electronics Inc., a unit of Taiwan’s Hon Hai Precision Industry Co. with operations in Fullerton and Cypress, shifted 200 jobs to Ontario last year, resulting in a 24% drop to 650 OC workers.

That was good enough to bring a 2% decline to the list’s overall employment, with Foxconn representing about 20% of the jobs on the list.

Without Foxconn in the mix, employment at the 11 others on the list was up 6% to 2,712 workers.

After two years of tough going, contract electronics makers here and elsewhere started seeing a rebound in 2003 as their customers sought to fill orders without taking on the risk of adding production themselves.

The biggest beneficiaries have been contract electronics makers who turn out products, mostly circuit boards, on short notice.

Those include No. 5 TTM Technologies Inc. of Santa Ana and No. 6 DDi Corp. of Anaheim.

Rather than sign long-term production deals, big-name computer and other electronics companies have turned to quick-turnaround contractors.

During the sector’s boom in the late-1990s, big players signed production contracts only to be stuck with lots of unsold products when corporate buyers stopped spending.

“It’s driven by the economy, obviously,” said Brian Stevens, director of finance at No. 2 Multi-Fineline Electronix Inc. of Anaheim, which makes flexible circuit boards for wireless phones, digital assistants and bar code scanners. “Much of it is consumer-driven. We sell to businesses, but they end up selling to consumers.”

Multi-Fineline, which went public in June, saw a 14% gain to 619 local workers in the past year.

“What’s happened is that there’s growth in flex assembly for cell phones,” Stevens said. “Each phone has a higher dollar value because there are more circuits in the phones. That’s been driving up our revenue.”

For the quarter ended June 30, Multi-Fineline had $71.5 million in sales, up 142% from a year earlier.

Santa Ana-based Express Manufacturing Inc., which makes circuit boards as well as computer, networking, industrial and medical electronics, came in at No. 3 on the list with 530 workers, an increase of 8% from a year earlier.

The company counted $43 million in 2003 sales, which were up 8% from the prior year.

Express Manufacturing is getting more work as the telecommunications sector consolidates, according to Twee Pham, the company’s director of marketing.

“Telecommunications is bouncing back,” she said. “We see an increase in our business from companies that have been acquired.”

Customers include Cisco Systems, ADC Communications Inc., Broadcom Corp. and Kingston Technology Co.

No. 4 Sanmina-SCI Corp. came in at 400 OC workers, a Business Journal estimate. The number includes about 200 workers at subsidiary Viking Interworks in Rancho Santa Margarita, a maker of computer memory products.

Circuit board maker TTM Technologies saw local employment increase only slightly,1% to 364 people. At the same time, TTM saw second-quarter sales grow by 50% from a year earlier to $61.6 million.

TTM moved from Redmond, Wash., to OC last year after 2002’s buy of Advanced Circuits Inc., a unit of Honeywell International Inc. that had a plant in Santa Ana.

DDi, which competes with TTM for rapid-fire circuit board work, saw employment drop 6% to 300 OC workers.

Even so, DDi has emerged as a survivor from the bottom of the sector’s downturn. The company came out of bankruptcy reorganization late last year and saw second-quarter sales surge 34% to $75.5 million.

Cal Quality Electronics Inc., a Santa Ana contract electronics maker that ranks No. 7, kept employment even at 130 people.

Minneapolis-based private equity investor Churchill Capital bought the maker of circuit boards, cables and other products in 2001.

No. 8 Irvine Electronics Inc., which makes circuit boards and other electronics for Boeing and Rockwell Collins Inc., among others, boosted employment by 14% to 99 people.

No. 10 BCP Trilogy of Placentia, which resulted from September’s combination of BCP Systems Inc. and Trilogy Magnetics Inc., boosted employment from 50 to 75 people in the past year.

No. 11 Murrieta Circuits boosted employment in Anaheim to 70 people, or 21% more than a year ago.

No. 12 IBS Electronics Inc. cut employment 10% to 35 workers.

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