Southern Tier hit by electronics downturn

CNY Business Journal (1996+), Apr 06, 2001 by Fitting, Beth

CONKLIN and OWEGO - Following a year of booming business, this year's softening of the electronics market in the United States is affecting industry in the Southern Tier, with one plant closing its doors and another reducing its work force by 10 percent.

In Conklin, electronics circuit-board manufacturer Flextronics recently announced that 'It is closing its doors in the first week of June, putting 470 workers on the job market in Broome County.

And this week in Owego, electronics fabricator Sanmina announced that it will lay off 140 of the 1,400 workers on its payroll.

Both companies came to the Southern Tier just last year, as the result Of acquiring companies here. Flextronics is part of the global Flextronics International Ltd., whose headquarters is in Singapore. Last year, Flextronics purchased DII (formerly Dovatron), to establish a manufacturing facility in Conklin at the Broome Corporate facility. Sanmina came to Owego, in June of last year, when it acquired the former Hadco Corporation facility there.

Joseph Kozlowski, labor market analyst for the New York State Department of Labor in Binghamton, says that prospects are good that the area will "weather the storm" caused by the slowdown of manufacturing, especially in the electronics circuit-board industry. He says, "The labor market has been tight for some time here. We had a jobless rate in February of 4 percent, the lowest ever for that month, and below the state and national levels." Kozlowski notes that, as of February, total employment of 120,800 in Broome and Tioga counties included 24,900 manufacturing jobs. And, he adds, "of 3,400 new Jobs created in the past year" in the area, " 1,000 are in manufacturing." Kozlowski says, "This [Flextronics] is only one of lots of electronics manufacturers" here.

Alex de Persis, interim president of the Broome Chamber of Commerce, says, "I feel for the people who are being laid off." Those layoffs, he says, "are in the board business. We are still on the whole doing pretty well. We had an excellent 2000 and folks at other firms here are still seeking to fill engineering positions." He notes that the open positions "have everything to do with skills."

Looking forward, de Persis, who admits "I'm an optimist," says that the NLX Corporation, a flight-simulations company based in Sterling, Va., has 42 employees in the area now and, although zoning changes await approval, the company plans to build in the Town of Union and increase its employment here to 360 people in 36 months. "We're hoping the community will absorb those workers who are being laid off," says de Persis. "I see the light at the end of the tunnel."

According to Carmine Renzulli, vice president of human resources at Sanmina Corp.'s headquarters in San Jose, Calif., those laid off at its Owego facility have been given severance packages based on seniority. The company has laid off workers in "a number of its facilities" in the United States, but, says Renzulli, "as soon as the market turns around," Sanmina hopes to hire back the laid-off workers.

Manuella Solomon, spokesperson for Flextronics, says that the company is in the process of making final arrangements for the Conklin plant; although some Conklin workers may be given the opportunity to relocate, final numbers have not yet been determined. Flextronics has 100 facilities worldwide. The remaining workers in Conklin will be offered severance packages, she says.

Flextronics International, Ltd. (NASDAQ: FLEX) for its fiscal year 2000, which ended in March 2000, had sales of $5.74 billion and net income of $181 million. Net income grew 252.2 percent over fiscal year 2000. Worldwide employment stood at 49,000, for a one-year growth of 170 percent. However, on March 15.

Morgan Stanley Dean Witter placed the company at "neutral," from the previous year's "strong buy," and on April 2 analysts cut the FLEX price target from $45 to $26. In September 2000, FLEX stock hit a 52week high of $44 15/16, in November, it hit a 52-week low of $21 3/8.

Sanmina Corp. (NASDAQ: SANM) was rated No. 53 in Fortune's "FastestGrowing Companies" and is No. 426 among the Fortune 500. As with Flextronics, Salomon Smith Barney on March 26 cut Sanmina's target to $40 from $64, but kept the "buy" recommendation.