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
-- 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
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.