US giant blows bubbles with Bluegum

US giant blows bubbles with Bluegum

Australian third-party contract electronics manufacturer The Bluegum Group has signed a definitive agreement with US supply-chain service provider Solectron which should see the former acquired by the latter.

Both parties are viewing the move as a match made in heaven with Bluegum needing a global partner to accelerate its rapid growth and Solectron, the world's largest electronics manufacturing services company, needing an Australian presence for its global customers.

Once finalised, Solectron will take control of Bluegum's entire operations.

This includes the Wangaratta (Victoria) and Liverpool (NSW) assembly plants, the Melbourne sales office, Sydney head office and the Singapore procurement office. Bluegum's 700 staff have all been retained and they were in fact one of the main assets Solectron was after.

Paul Weiss, supply-chain director for Bluegum, told ARN that the company had almost single-handedly returned legitimacy to the Australian electronics manufacturing industry. Weiss said that "approximately half" of all the work it does was related to PC assembly, upgrades, repairs and servicing, as well as other activities in the IT industry. The other half is similar operations for the telecommunications industry.

He denied it was an indication that Australia's manufacturing industry cannot compete in a global economy, saying that the move endorses the belief there is a future for local manufacturing.

"Bluegum has only been in business for two years and in that time it has pulled back a lot of the manufacturing work that was going overseas to places like China and Taiwan," Weiss said. "Attracting the world's biggest company of this sort to Australia is an endorsement of what we have achieved."Weiss then added that Solectron had been enjoying a compound annual growth rate in excess of 50 per cent for the last 10 years and that Bluegum's operations give it a head start on Australian markets.

"It is a partnership made in heaven. Our future growth was dependent on having a global footprint while Solectron's biggest challenge at the moment is getting the skilled staff and infrastructure. This was the most effective way for both parties to achieve their goals."In a press statement, Paul Zuber, Bluegum's founder and CEO, said: "The merger gives us access to the substantial financial resources and technological capabilities of Solectron. We believe we will now be well placed to thrive in an increasingly competitive market."The same statement had Solectron's Asian president, Ken Tsai, gushing that this acquisition allowed Solectron's global services business unit to "rapidly roll out its complete range of integrated service offerings in Australia".

Financial details of the deal were not available.

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