Why does Flextronics still have manufacturing activities in some highcost regions? Case 7.1 Defining the roles of manufacturing plants at Flextronics As an electronics manufacturing services (EMS) company, Singapore’s Flextronics International (managed from its headquarters in San Jose, California) may be an unfamiliar name to many, but it produces and delivers printers for Hewlett-Packard, cell phones for Sony Ericsson and Motorola, Xboxes for Microsoft and routers for Nortel, just to name a few of its customers.

Its net sales in the fiscal year 2006 reached $15.3 billion US, with 22 per cent from the Americas, 22 per cent from Europe and 56 per cent from Asia. Its manufacturing facilities are dispersed over 30 countries in Asia, Europe and the Americas.18 Originally founded by Joe McKenzie and his wife in California in 1969, Flextronics initially soldered components into printed circuit boards (PCBs) for electronics firms (commonly referred to as original equipment manufacturers)

in Silicon Valley. In 1980, the McKenzies sold Flextronics to a group of private investors, who expanded the firm’s business from a mere ‘stuffer’ to a contract manufacturer. When Flextronics was just a ‘stuffer’, OEM customers shipped PCBs and components to Flextronics, which soldered components into the PCBs and then shipped the finished PCBs back to the OEM customers for further assembly. In contrast, when Flextronics became a contract manufacturer, OEM customers provided only the PCB design, and Flextronics took on the responsibility of purchasing the components and manufacturing the board.