Flextronics may shift some operations from Chennai
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Flextronics may shift some operations from Chennai
Bangalore: Flextronics, an electronics manufacturing services (EMS) provider, is considering to shift some of its manufacturing operations from Chennai to Bangalore. The shift is being considered because of the company's belief that Bangalore can be a good option for manufacturing some of its components, the Economic Times reports. But the spokespersons of the company have denied any such move, maintaining that the company is not even planning to shift its operations. "As an EMS provider, we constantly move capital equipment across our network of manufacturing facilities globally. If we transfer a few lines out of Chennai, it might well be in exchange of other equipment due to a shift in demand or operational strategy and should not be seen as an indication of any rationalization or downsizing exercise," responded Valerie Kurniawan, Senior Director, Corporate Marketing and Communications, Asia, Flextronics. The company had announced to invest $200 million in phases at the special economic zone (SEZ), for which the Tamil Nadu government had allotted 250 acres. Shifting a SMT (surface mount technology) line costs up to $1 million. The company is considering such a move, says component supplies and officials in the Tamil Nadu Industries and Labor Department. Some vendors have been asked to stop supplies too. Officials added that Flextronics will not shut down the unit but is only considering moving production of some components. The reasons for the shift are not clear. Flextronics had announced that it will produce one million handsets per month at the time of opening the facility. Ashok Dhawan, Vice President and Managing Director, Global Shared Service Center, Flextronics stated, "We have no plans to shut down the Chennai facility. We are 30 months into our operations; hence it is too early to talk about viability." Asserting the company's long term interests in India, Dhawan said, "In the recent months, we have launched Flex Power, a power chargers manufacturing unit at Chennai Industrial Park (Sriperumbudur SEZ). In addition to Chennai factory, we also operate a repair services unit at Bangalore and GSSC at Chennai. The centre has three premises and has a headcount of over 1,200 regular employees doing high-end IT and finance work mainly." The Puducherry unit was closed two years ago following completion of its business with customers. Bangalore operations are normal. The company's investments are close to its promise of investing $100 million is SEZ, said Dhawan. The State Labor Department hinted that the company is thinking about shifting a portion of the plant. According to the Industrial Disputes Act, factories employing 100 or more workers must give 90 days prior notice to government if it intends to close down. The Labor department will then investigate and ascertain the reasons and hear the party before passing an order. State administration is curious over the developments considering it was one of the big investment catch in the electronic hardware sector. The company employs 1,400 people, of which 400 are regular employees. Industry forecasts states the EMS sector will touch $40 billion by 2012. India's economic growth rate, along with business opportunities in the telecom and automotive sectors had attracted many global corporations to the southern EMS space. The list of EMS and original design manufacturers included Delphi, Flextronics, Jabil, Sanmina-SCI, Solectron and Wintek. The capital investments by companies in this corridor have touched 3,300 crore, which is half of the country's EMS business. But, the global slowdown has also hit the players hard.

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