Signs Filter Supply Agreement with Elcoteq for Europe and North
America; Will Sell Certain Manufacturing Assets in Europe and Cease
Most In-House Filter Production in Romania, Italy, and North America
In its continuing drive toward global supply chain excellence,
Andrew Corporation, a global leader in communications systems and
products, has undertaken strategic actions that include naming Elcoteq
SE, a world leader in electronics manufacturing services, its
strategic supplier for filter products in Europe and North America and
selling to Elcoteq certain filter manufacturing assets in Europe.
The strategic actions continue efforts by Andrew to simplify,
reduce costs in, and add flexibility to its global filter operations,
and include:
-- Signing a multi-year strategic supply agreement with Elcoteq,
which will serve as manufacturer of Andrew's high-volume
filter products in Europe and North America. Elcoteq's
manufacturing in lower-cost areas of Europe and North America,
combined with Andrew's existing Shenzhen, China manufacturing
location, provides Andrew with a global source for low-cost,
regionally-produced filter products.
-- Selling filter manufacturing assets--including inventory,
facility leases, employment contracts, and manufacturing and
testing equipment--at its Arad, Romania facility to Elcoteq,
which will assume immediate operating responsibility for the
location. Elcoteq will retain all of the approximately 250
employee positions in Arad.
-- Notifying workers in Italy of its intent to discontinue
high-volume filter production at Capriate and eliminate
approximately 215 employee and contractor jobs combined at
both its Capriate and Agrate locations. Andrew will retain
low-volume filter production, supply chain management, and
repair services in Capriate, while, in Agrate, Andrew will
retain a variety of functions that include product line
management, customer sales, research and development, quality,
repair, supply chain management, new product introduction,
engineering, and staff support. Completion of the workforce
reductions is pending labor negotiation.
-- Ceasing filter production in Amesbury, MA, and, eventually,
Nogales, Mexico, and centralizing future North American filter
production with Elcoteq in Juarez, Mexico. Andrew will close
the Amesbury facility by year-end, completing the ongoing
transfer of filter manufacturing there to lower-cost locations
in Mexico and China. All manufacturing related
jobs--approximately 80--in Amesbury will be eliminated, while
the remaining 30 positions in R&D and new product introduction
will be relocated to Andrew's Warren, NJ, location. Filter
production in Nogales involving approximately 30 workers will
continue over the next several months until capabilities are
ramped up by Elcoteq in Juarez. The remainder of Andrew's
workforce and operations in Nogales for non-filter production
are not affected by these changes.
Under the agreements, Elcoteq will pay approximately $20 million
for the Andrew filter manufacturing assets, while Andrew is
anticipating purchasing approximately $100 million in Elcoteq-produced
products during the first year of this multi-year supply agreement to
serve its growing global customer base.
Andrew's cost to implement these strategic actions is estimated to
be in the range of $15 million to $20 million, including severance and
asset write-offs. These costs are expected to be incurred over the
next two to three quarters.
In addition to continuing to operate its high-volume, world class
Shenzhen filter manufacturing location, Andrew also will retain
in-house the production of low-volume filters and value-added,
specialized functions such as testing, research and development, new
product introduction, product engineering, design, and quality control
in key regions around the world.
"With the rapid growth in Andrew's filter business over the past
few years, we continue efforts to ensure that our filter supply chain
remains as flexible, cost-efficient, and regionally-focused as
possible in support of our customers' evolving network requirements
around the world," said Mickey Miller, group president, Base Station
Subsystems Group, Andrew Corporation. "Through this strategic
relationship with Elcoteq, we are establishing a world-class, flexible
manufacturing infrastructure and supply chain for filters that will
grow with our business and our customers' needs."
"We are extremely honored that Andrew, one of the leaders in its
industry, decided to expand its collaboration with Elcoteq," said
Jouni Hartikainen, chief executive officer, Elcoteq SE. "This
agreement strengthens the solid relationship that started in 2001. We
believe that we can bring many solutions to Andrew based on our
profound experience in communications technology. For us this
agreement boosts our Communications Network Equipment business in line
with our strategy."
About Andrew Corporation
Andrew Corporation (NASDAQ:ANDW) designs, manufactures, and
delivers innovative and essential equipment and solutions for the
global communications infrastructure market. The company serves
operators and equipment manufacturers from facilities in 35 countries.
Andrew (www.andrew.com), headquartered in Westchester, IL, is an S&P
500 company founded in 1937.
Forward Looking Statements
Some of the statements in this news release are forward looking
statements and we caution our stockholders and others that these
statements involve certain risks and uncertainties. Factors that may
cause actual results to differ from expected results include
fluctuations in commodity costs, the company's ability to integrate
acquisitions and to realize the anticipated synergies and cost
savings, the effects of competitive products and pricing, economic and
political conditions that may impact customers' ability to fund
purchases of our products and services, the company's ability to
achieve the cost savings anticipated from cost reduction programs,
fluctuations in foreign currency exchange rates, the timing of cash
payments and receipts, end use demands for wireless communication
services, the loss of one or more significant customers, and other
business factors. Investors should also review other risks and
uncertainties discussed in company documents filed with the Securities
and Exchange Commission.
