The biggest growth will come in Mexico, China, and Europe.
Europe, in particular, will grow very fast. Marks even talked about some OEMs moving business to Hungary that was previously made in Asia, due to faster time to market and duty issues. In Europe, Flextronics has a very experienced management team. Most of the managers have worked in electronic manufacturing for 20+ years and have had management positions with Ericsson, Phillips, Siemens etc. They can handle the growth rate there.
In China, they have the management team that has grown the most profitable part of Flextronics business. I wouldn't anticipate problems handling the growth rate there either.
In Mexico, I don't know much about the management team. And in the US, I don't see as much growth after the SJ acquisition. I would agree that Flextronics will be expanding outside the US more than in the US. This appears to be where the most profitable growth opportunities are. I don't think we are at the point where consolidation will take place yet, so I don't expect to see them buying out the smaller ECM players, especially a company like ACTM, who is owned predominantly by insiders.
Another reason why I don't expect too much expansion in the US for Flextronics, is because they are focusing on small and miniature electronic devices. It is probable that these kind of devices will be made outside the US.
Paul |
