TORONTO, Dec 06, 2000 (The Canadian Press via COMTEX) -- In another major
outsourcing deal for Celestica Inc. (CLS), the Toronto-based electronics
manufacturer has landed a $1-billion US contract to supply Motorola Inc. (OCX)
for three years and agreed to buy two Motorola plants for about $70 million US.
 
Celestica is capitalizing on a strong worldwide trend among well-known
multinational technology companies like IBM and Nortel to have their products
made by outside manufacturing specialists. As part of Wednesday's deal,
Celestica will hire about 1,200 Motorola employees - 650 at a plant in Dublin,
Ireland and 550 at a plant in Mount Pleasant, Iowa.
 
Motorola said it will cut 2,870 positions worldwide, including jobs at a third
plant in Florida that will be converted for another purpose as a result of the
reorganization with Celestica.
 
Celestica, a former IBM division and now a subsidiary of Gerry Schwartz's Onex
Corp. conglomerate, has made similar deals this year with electronics giants.
 
In January, Celestica won a $1.5-billion US supply deal with IBM and agreed to
pay $500 million US for three IBM plants that make circuit boards. And in June,
Celestica gained a $1.2-billion US supply contract with NEC Corp. while
acquiring a plant and other assets from NEC's Brazilian subsidiary.
 
Analyst Tony Boase of A.G. Edwards in St. Louis, Mo., said Celestica is ranked
No.4 in revenue among companies that provide electronics manufacturing services.
 
But the Toronto-based company is in a good position to overtake SCI Systems,
which had been the leader until it was passed by Solectron. He said it looks as
if Flextronics International will also surpass SCI and take the No.2 spot.
 
"I think Celestica has a very strong reputation," Boase said. "Their ability to
manufacture servers and networking products is very high."
 
Celestica has a list of blue-chip clients that trust the Toronto company to
build their core products, he said.
 
In the latest deal, Celestica will provide help make Motorola wireless telecom
products, including cellphones, messaging devices, two-way radio products and
related accessories.
 
Motorola CEO Christopher Galvin said his company "must remain nimble and stay
ahead of the marketplace in order to retain and grow its position as a
technology leader.
 
"Leveraging the expertise of a strategic partner and leader in the electronics
manufacturing services industry, like Celestica, enables Motorola to better
anticipate its customers' evolving needs and helps speed the time-to-market of
Motorola's products around the world."
 
Motorola, based in Schaumburg, Ill., had 1999 sales of $33.1 billion US. It has
about 130,000 employees worldwide.
 
Celestica employs 25,000 worldwide and operates 33 manufacturing and design
facilities in the United States, Canada, Mexico, the United Kingdom, Ireland,
Italy, the Czech Republic, Thailand, Hong Kong, China, Malaysia and Brazil.
 
The company reported a 157 per cent rise in third-quarter profits in October,
reaching $83.9 million US.
 
Celestica shares rose $8.05 to $100.05 in Wednesday afternoon trading on the
Toronto Stock Exchange, making it the biggest gainer in the TSE's industrial
products group.
 
 
DAVID PADDON
 The online source for news sports entertainment finance and business news in Ca
ada
 
 Copyright (C) 2000 The Canadian Press (CP), All rights reserved