Celestica invests US$26m in new Malaysia plant
By Julian Matthews
Friday, October 08 1999

KUALA LUMPUR--Celestica, one of the largest contract electronic manufacturers in the world, is investing in its first plant in Malaysia as part of a major push in Asia.

The company is pumping in US$26 million for its initial phase to purchase a 50,000 sq ft plant on 7.5 acre plot of land at the Kulim Hi-Tech Park in the northern state of Kedah.

"We are very excited about the potential in Malaysia and firmly committed to growing Malaysia to meet our customers' needs," said corporate communications representative Pam Goddard.

The new plant is projecting an annual output of three million units of electronic components for its workstation, server, PC and communications markets. It is set to begin production in December and will hire 1,000 staff for Phase One of the project.

Goddard said the plant can quickly expand to an adjacent lot of about 200,000 sq ft and has reserved an additional 5.5 acres for its second phase which may involve a much larger investment.

"Celestica recently completed significant expansions in its facilities in China, Thailand and Hong Kong. Malaysia represents the next step in the company's strategic plan for Asia as it is a new market," she said.

Goddard said the Toronto-based company chose Malaysia after thorough evaluation on costs, labor, infrastructure and tax incentives and the results were "very positive".

"The overriding factor was the quality of the people we saw there. There is a highly-skilled employee base and the government has created an environment that is conducive to investment by large multinational firms to build profitable and successful businesses," said Goddard.

Celestica has more than 16,000 staff with 28 manufacturing and design facilities in 11 countries. In its second quarter this year, Celestica posted record profits of US$27.5 million, or 31 cents a share, on revenue of US$1.25 billion compared to adjusted net earnings of US$4.6 million, 12 cents per share, on sales of US$773 million last year. That represents a 158 percent jump in earnings and 62 percent rise in sales over 1998.

Celestica's entry marks another coup for Malaysia which has managed to attract most of the top-tier contract electronic manufacturers (CEMs) in the world including SCI Systems Inc, Solectron Corp, Jabil Circuit Inc, NatSteel Electronics Ltd and Flextronics International Ltd to set up plants here.

Industry trackers Technology Forecasters Inc said CEMs completed 60 acquisitions of plants between 1996 and 1998. This year more multinational OEMs are expected to divest their manufacturing operations and fully embrace the outsourcing model.

Technology Forecasters project the worldwide electronic manufacturing services revenue will grow from US$89.6 billion in 1998 to US$178 billion in 2001, representing a 25 percent compound annual growth rate.