Recession wherefore: Flextronics to restructure for anticipated cash savings of $230M-$260M annually


Flextronics , a leading electronics manufacturing services (EMS) provider, says its newly reported restructuring plans are intended to rationalize the company's global manufacturing capacity and infrastructure as a result of current macroeconomic conditions and decline in demand from its OEM customers.
The current global economic crisis and related decline in demand for its customers' products across all of the industries served has caused Flextronics OEM customers to reduce their manufacturing and supply chain outsourcing, ultimately impacting the company's capacity utilization levels.
Flextronics's restructuring activities are intended to improve its operational efficiencies by reducing excess workforce and capacity. Additionally, the cost reductions and other activities will result in a further shift of manufacturing capacity to locations at the company with higher efficiencies and, in most instances, lower costs.
The costs associated with these restructuring activities include employee severance, costs related to owned and leased facilities and equipment that is no longer in use and is to be disposed of, and other costs associated with the exit of certain contractual arrangements due to facility closures. The exact timing of these charges and cash outflows, as well as the estimated cost ranges by category type, has not been finalized. Additionally, the amount and timing of the actual charges may vary due to several factors such as required consultation with the company's employees and their representatives and the compliance with statutory severance requirements in certain jurisdictions.
Flextronics expects to recognize between $220 million and $250 million in pre-tax restructuring and impairment costs over the course of the company's fiscal years 2009 and 2010. Approximately $190 million to $210 million of these costs are expected to be recorded in the company's operating results for the fiscal year ending March 31, 2009. Flextronics expects that a significant portion of the total restructuring costs will be related to employee benefit and severance arrangements. The charges related to the restructuring activities, excluding asset impairment charges, are expected to result in cash expenditures between $130 million and $150 million that will be payable primarily during fiscal year 2010.
Additionally, Flextronics anticipates that upon the completion of these restructuring activities, the potential savings in cost of goods sold achieved through lower depreciation, reduced employee expenses, reduced operating costs and improved operational efficiencies, as well as reduced selling, general and administrative operating expenses will yield annualized savings ranging from $230 million to $260 million.

No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Controller programming; Safety networks; Enclosure design; Power quality; Safety integrity levels; Increasing process efficiency
Additive manufacturing benefits; HMI and sensor tips; System integrator advice; Innovations from the industry
Robotic safety, collaboration, standards; DCS migration tips; IT/OT convergence; 2017 Control Engineering Salary and Career Survey
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me