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Contract Electronics Makers Pare Jobs Amid Competition

Orange County’s largest contract electronics makers cranked out more sales in the past year or so but falling prices,and profits,deflated local employment.

In the past year, contract electronics makers, which make circuit boards and other products for technology and aerospace companies, cut local employment by 3% to 3,210 people, according to this week’s Business Journal list.

The list of 13 businesses includes three estimates.

The companies saw sales rise 3% to $23.2 billion for the most recent 12 months, most through June.






The list is made up of companies that aren’t as well known as the customers they make gear for, including Hewlett-Packard Co., Cisco Systems Inc. and Boeing Co.

Last year, the companies on the list posted a gain in jobs, after subtracting a 14% drop in local workers at the largest player here, Taiwan’s Foxconn Electronics Inc.

This year the Business Journal estimated Foxconn, still the largest contract manufacturer here, at 650 workers in Fullerton, unchanged from a year ago. Sales are estimated to be flat at $10 billion.

Without Foxconn, the 12 other businesses posted a 4% decline in local employment from a year ago. Minus all three estimates, employment dropped 7%.

No. 2 on the list was Santa Ana-based Express Manufacturing Inc., which saw local employment slip 3% to 515 people during the past year. Sales grew 8% to $43 million during 2004 for EMI, which primarily makes printed circuit boards.

Competition from factories in China has squeezed EMI, said C.P. Chin, the company’s president. EMI sells to telecommunications, networking and medical companies, among others.

“A lot of customers are always interested in reducing the costs of their products,” Chin said.

EMI has been trying to diversify by hiring more engineers who offer design services, instead of just manufacturing.

No. 3 Anaheim-based Multi-Fineline Electronix Inc. saw its local employment shrink 9% to 500 people in the past year after a project was completed, said Phil Harding, chief executive of the company known as M-Flex.

The company grew elsewhere, primarily in China. Overall employment at M-Flex grew 35% to nearly 7,648 people in the past year.

M-Flex has about 500,000 square feet of production space in China and recently said it would add another 200,000 square feet.

Sales for the 12 months through June were up 46% to $318 million.

The company provides flexible circuit boards to Motorola Inc., which has been growing of late. Motorola makes up around 80% of M-Flex’s sales. M-Flex has felt the sting of competition, saying this summer it was seeing “pricing pressure.”

No. 5 Santa Ana-based TTM Technologies Inc. saw local employment slip 6% to 343 workers while its overall headcount climbed 2% to 1,682 people. Sales rose 8% to $237.4 million for the 12 months through July 4.

TTM also is seeing prices for its circuit boards hit by competition. The company reported a 7% sales decline in the quarter ended July 4, when it had $57 million in sales. TTM’s operating profit dropped by 56% to $4.8 million in the period.

No. 7 Santa Ana-based Cal Quality Electronics Inc. was one of the few gainers on the list, growing local employment 15% to 138 workers. Sales for the 12 months through June grew 40% to $28 million.

Cal Quality focuses on midsize companies that may be too small for the bigger contract electronics makers, Chief Executive Bill Healey said.

The company makes electronics for medical companies and others that require more complex products made in smaller quantities, Healey said.

No. 11 Irvine Electronics Inc. of Irvine was the biggest employment decliner by actual workers and percentage. It reduced its workforce 40% to 60 people. Sales held steady at $10 million for the 12 months through June.


Shift to Military Work

Irvine Electronics has shifted from high-volume commercial work, where competition from China is greatest, to more military and government contracts.

The company has gone from 75% commercial a few years ago to 80% government work now, said Onnig Zerounian, Irvine Electronics vice president. Military contracts typically aren’t outsourced overseas, he said.

The change has meant fewer workers for lower volume work, including components that go on the Space Shuttle, according to Zerounian.

“We had to quickly revert to stuff that can’t go out to China,” he said.

Among the products Irvine Electronics used to make: the circuit board for the mirrors and windows in Chevrolet Corvettes. Now, they’re made in China, according to Zerounian.

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