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Flextronics Review

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As the second-largest EMS service provider in the world, Flextronics has been lauded for its excellent supply chain organization. It was the first American manufacturer to offshore production sites and was a chief pioneer in turnkey solutions for telecommunications infrastructure and consumer electronics.

Although Flextronics is typically known for consumer electronics, the company offers end-to-end solutions to OEMs in almost every electronics industry. Headquartered in Singapore, Flextronics has a global reach in over 30 countries, with 27.6 million square feet of manufacturing space and a global workforce of 200,000.

Markets: High reliability (military, aerospace, automotive, energy, medical); high velocity (telecom, aftermarket services); industrial & emerging industries (appliance & lifestyle, industrial instrumentation/equipment); integrated network solutions (communications, networking, and server & storage).

Services: Full range of EMS services.

Specialties: Telecommunications infrastructure (45% of sales in 2013), high velocity/consumer (26% of net sales in 2013).

US locations: Milpitas, CA; Morgan Hill, CA; Valencia, CA; Northfield, MN; Louisville, KY; Coopersville, MI, Atlanta, GA; Columbia, SC; Ashville & Raleigh, NC; Austin, TX; Dallas, TX; Memphis, TN.

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Offshore locations:

Americas – Canada (Ottawa, Toronto); Mexico (Tijuana, Juarez, Guadalajara, Aguascalientes); Brazil (Manaus, Sorocaba, Sao Paulo).

Asia China (Dongguan, Ganzhou, Hong Kong, Shenzhen, Zhuhai, Tianjin, Nanjing, Suzhou, Chengdu, Shanghai), Malaysia (Penang, Port of Tanjong Pelepas-Johor, Senai-Johor, Skudai -Johor), India (Mumbai, Pune, Guraon, Bangalore, Chennai), Singapore (Changi, Joo Koon, Kallang), Philippines (Manila, Cebu), Indonesia (Batam), Japan (Ibaraki, Tokyo).

EMEA – Hungary (Budapest, Pecs, Sarvar, Tab, Zalaegerszeg, Gyal); Germany (Frickenhausen, Ostbevern, Paderborn); Netherlands (Oostrum, Venray); Poland (Pczew, Lodz); Italy (Milan, Treviso) Czech Republic (Brno, Pardubice); Ireland (Limerick-Cork, Limerick); Sweden (Ronneby); Ukraine (Mukachevo); Romania (Timisoara); Austria (Althofen); England (Manchester, Swindon); Turkey (Istanbul); Israel (Migdal Haemek, Ofakim, Yavne).

Certifications:  ISO9001:2008, AS9100C (Aerospace), AS9120 and TS16949 (Automotive), ISO13485 (Medical), TL900 (Telecom), ISO14001, ANSI-ESD S20.20, IPC-A610 Class 1-3, ITAR Registered.

Financial: FY2013 $23.6 billion in revenue, down 19% FY2012. However, in FY2015Q1, Flextronics saw revenues of $6.6 billion, a 12% year-over-year increase compared to Q12014 ($5.7 billion), which was higher than the company's expected guidance. Flextronics attributes the gains to high performance in all four of their key business segments, two of which--Industrial & Emerging Industries and High Reliability Services--reaching "record sales." Moving into FY2015 Q2, however, Flextronics expects growth to be flat at best ($6.2 billion - $6.6 billion).  

Size: 200,000 employees, 27.6 million square feet of manufacturing space.

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Founded in 1969, Flextronics was among first companies in Silicon Valley to offer “board stuffing” services to OEMs increasingly unable to meet volume requirements in-house. Founder Joe McKenzie and his wife would hand-solder components to boards and then return finished products, a service that came to be know as "board stuffing." The business thrived and was sold in 1980 to Bob Todd, Joe Sullivan, and Jack Watts.  As CEO, Todd transitioned the company from board stuffing to contract manufacturing. Flextronics would be among the first to automate production, introduce board-level testing, and popularize the turnkey model. In 1981 they became the first American company to go offshore, establishing a facility in Singapore.

Flextronics expanded through the 1980s, helping to assemble the original Hayes modem and supplying disk and tape subsystems for Sun workstations. Growth allowed the company to go public in 1987, but the economic recession of the early 1990s put the company in distress. To avoid bankruptcy, profitable Asian operations were spun off and taken private, and the remaining US plants were closed. The new company moved quickly to re-establish a US presence, tripling revenue between 1992 and 1995 to $237 million, and becoming a public company again in 1994. By the end of the '90s Flextronics had acquired more than 19 companies and revenue surpassed $2 billion. Just one year later revenue would double to over $4 billion.  In the 2000s Flextronics growth was driven by acquisitions and the divestiture of manufacturing facilities from major OEMs.

Today, Flextronics’ operations are broken up into four business segments: high reliability, high velocity, industrial and emerging industries, and integrated network solutions. While the company has traditionally focused on high-velocity products, 45% of Flextronics’ net sales in 2013 were in integrated network solutions, with only 26% in the consumer high-velocity markets.

In FY2013, Flextronics’ ten largest customers—Alcatel-Lucent, Apple, Cisco, Ericsson, Ford Motor Company, Hewlett-Packard, Huawei Technologies, Lenovo, Microsoft, and Research in Motion—accounted for approximately 47% of its net sales. According to their 2013 annual report, Flextronics experienced a $2 billion reduction in revenue, largely due to an accelerated disengagement with their largest smartphone customer.

Flextronics is organized by customer focus teams and vertically integrated. Most of its manufacturing capacity (76%) is offshored, making Flextronics an industry leader in low-cost production. In certain cost-effective regions, the company runs hyper-vertical “industrial parks,” which co-locate manufacturing and logistics operations with their suppliers.

In 2013 Flextronics launched a start-up accelerator program called Lab IX.  They announced their intention to award up to $500,000 to selected companies to grow ideas and bring them to market. Potential participants must be less than 3 years old with less than $5 million in funding and be in the early stages of introducing disruptive technologies.

Controversies:

In November 2013, Apple Inc. claimed Flextronics was using forced labor to assemble components for the iPhone 5.

Most recently, FPGA supplier Xilinx filed a complaint against Flextronics for fraudulent purchasing practices, which has raised questions about Flextronics’ business and quality models. 

Awards:

Stevie Award (human resources), Lenova 'Perfect Quality Award,' 2013 Best Plants in America, F5 'Direct Order Fulfullment' Award, Ciena Supplier of the Year, Lockheed Martin Supplier Excellence Award, Emulex Supplier of the Year, IPC Corporate Recognition Award, Top 100 Foreign Companies in China Award.

Glassdoor:

Based on 360 reviews on Glassdoor.com, Flextronics received 3/5 stars, with 49% of respondents recommending the company to a friend. Based on 182 ratings Flextronics’ CEO, Mike McNamara, received a 65% approval rating.

“Tremendous amount of opportunity to learn about customer needs, large scale operation and business process discipline. There is no shortage of excitement because there is always something new that's happening.” – Current Flextronics Senior Director, Business Development.

“Demanding pace that makes work-life balance often difficult to achieve.” – Current Anonymous Flextronics Employee.

(See Flextronics’ complete Glassdoor review.)

Web (about): http://www.flextronics.com/about_us/default.aspx

Web (contact): http://www.flextronics.com/contact_us/default.aspx


Further Reading: 3 Biggest Myths In Contract Manufacturer Supplier Selection