Four months after announcing plans to buy contract electronics manufacturer SCI Systems Inc., San Jose-based Sanmina Corp. could be looking to close its 400-employee Irvine plant, according to analysts.
“They’re really doing a hatchet job on everybody right now,” said Tony Boase, an analyst with A.G. Edwards Inc.
Sanmina has closed three plants since announcing the SCI acquisition and could close another six in the coming months, Boase said.
“It’s my guess that the Irvine plant would be one of them,” he said.
The employees at the Irvine plant most likely would be consolidated into the company’s new 100,000-square-foot Costa Mesa plant, which opened in February.
Huntsville, Ala-based SCI doesn’t have any plants in Orange County.
Sanmina has been waiting to see how the business climate shakes out before deciding what to do with the Irvine plant, said Jim Ryan, its manager.
“We are continuing to look at it,” he said.
The Costa Mesa building, which has sophisticated features similar to a semiconductor fabrication plant, houses Sanmina’s advanced interconnect manufacturing group, which previously was based in Irvine. Acquired from Honeywell International Inc., the Costa Mesa facility stands to give Sanmina the ability to design products and carry them to high-volume production.
It’s also double the size of the Irvine plant,a factor the company probably will look at when consolidating with SCI.
“I would say that anything less than 100,000 square feet should go,” Boase said. “And even some of the 100,000-plus-square-foot needs to go.”
The consolidations come as Sanmina’s business has slowed dramatically since last year.
Sanmina posted earnings for the September quarter of $3.6 million,vs. $102.4 million in the year-ago quarter. Sales were $600 million, down from $1.3 billion a year ago.
Sanmina’s pending buy of SCI, announced in July, would create one of the largest contract manufacturers, making gear for big names such as Nortel Networks Corp. and Cisco Systems Inc.
Milpitas-based Solectron Corp. is the largest contract electronics manufacturer.
Analysts also believe the SCI acquisition will trigger more consolidation.
Even though the acquisition would give Sanmina a huge increase in manufacturing capability, the company has indicated it won’t move out of OC altogether because of the highly skilled workforce here.
The new Costa Mesa plant is evidence of that intention to stay, executives say.
“We like being in Orange County a lot,” Ryan said earlier this year.
“We like the visibility and the labor market here. We’ve heard companies say they were having problems with labor. We haven’t seen that at all,” he said. n
