REL: 0908 HRS Rakon Limited
GENERAL: RAK: Rakon announces realignment of manufacturing and R&D
6 November 2012
Rakon announces realignment of manufacturing and R&D activities
Rakon has announced plans for a significant step in the realigning of its
global business taking advantage of its scale manufacturing plants in India
and China. The impact of this plan is expected to deliver permanent cost
reductions and margin improvements of $10 million per annum, with 70% of that
result in place by April 2013.
Rakon CEO, Brent Robinson said the realignment would enable the NZ facility
to concentrate more heavily on the company's growing R&D and new product
development, but would inevitably result in staff cuts in NZ.
"We are making changes across our global business as we continue to build a
globally competitive platform capable of meeting fast-growing demand within
our target markets, with the resulting cost improvements clearly a benefit to
Rakon and its shareholders."
One year on from the opening of its manufacturing facility in Chengdu, China,
Rakon intends to boost its capacity there, transferring some of its crystal
manufacturing capacity from Auckland. Brent Robinson said the company had
been building its scale manufacturing platforms in India and China for some
years, acknowledging their economies of scale and lower labour costs. "At
the same time we have been focussing and transitioning our NZ, UK and French
businesses to spearhead new product development, manufacture of high
performance and value products and early stage of volume products."
"Our platform in China is now firmly established, with a strong local team
well supported by the experience and expertise of our team in NZ. The
Chengdu facility is running very well and performing as we expected. It has
confirmed our belief that now is the right time to make further adjustments
to the business which will allow us to perform as we know we can."
"The move also allows us to capitalise on significant global growth in demand
for smart wireless devices. Our teams in China and NZ are also working
collaboratively on a number of initiatives to reduce cost and improve
productivity to further boost returns from this business."
However as a result of the shift of crystal manufacturing capacity and a
review of project activity and priorities there will be a reduction in the
number of employees in NZ. Up to 60 of Rakon's 430 NZ employees are likely
to lose their jobs as a result of the change.
Brent Robinson said he regretted that the dynamics of the global market meant
the NZ team was impacted by this change.
"Whilst it is very positive that Rakon is increasing market share in our
target markets, we have to be realistic and accept it is not possible to
sustain labour intensive elements of manufacturing activity in NZ for such
globally competitive markets.
We will continue to manufacture temperature compensated crystal oscillators
(TCXOs) in NZ using our automated and proprietary manufacturing processes
along with other high performance products. NZ also continues as the Head
Office for the Rakon Group and will remain our largest R&D facility as well
as providing technical leadership for our Chinese facility."
Rakon is also further expanding capacity in India to meet demand and
realigning its activities in the UK, France and also across its global sales
team resulting in improved margins for the Group.
Mr Robinson noted all of the personnel changes will be progressively
implemented over the next few months.
End CA:00229376 For:RAK Type:GENERAL Time:2012-11-06 09:08:46