Jabil looks far for cutting edge
By ROBERT TRIGAUX
Published January 21, 2005
Wuxi, Ranjangaon and Uzhgorod typically are not hot topics of conversation in the Sunset Room of the Vinoy Country Club on St. Petersburg's tony Snell Isle.
But these are just some of the distant, lesser-known cities - in China, India and the Ukraine - where St. Petersburg's Jabil Circuit Inc. is betting its future as a cutting-edge electronics manufacturer.
At the company's annual shareholders meeting Thursday, Jabil executives told a few dozen investors that business is tough but good. The company is growing, even if the stock price is down. And combing the globe to find the best manufacturing sites at the least cost is an eternal corporate quest.
"We smoked the competition," Tim Main, Jabil's CEO, told company shareholders. Jabil is not out to become the world's biggest electronic manufacturer. But it will fight to remain among the most profitable, he said, then offered this parallel.
"Toyota is smaller than GM, Ford - until recently - and Daimler-Chrysler, but its market cap is bigger than all three combined," Main said.
So the example is a bit of a stretch. Jabil hardly reigns over global electronics manufacturing as Toyota dominates the automotive world. Yet Jabil is outgrowing and outearning its chief competitors. Jabil manufactures and, increasingly, designs circuit boards and electronics for big-name companies such as Cisco, Hewlett-Packard, IBM, Nokia and Whirlpool in the consumer, telecommunications, instrumentation and automotive industries.
Jabil is hardly alone among local companies pressed by global competition to constantly fine-tune worldwide operations. As Jabil explained its plans to expand rapidly in China, add a second plant in India and bulk up in eastern Europe, another area technology company reported it will shrink its call center operations in India.
Tampa's Sykes Enterprises said in a regulatory filing Thursday that it will downsize its call center business in Bangalore less than three years after setting up shop there. Instead, Sykes will look for opportunities elsewhere in Asia.
Jabil's Main tells a robust tale of a company that is growing in sales, profits and employees. Revenues topped $6.2-billion last year, up sharply from $4.7-billion in '03. Profits similarly jumped. And the 33,000 employees Jabil had at the start of 2004? Make that 43,000 workers, a 30-percent gain in one year, spread across 41 facilities in 20 countries.
That includes about 7,000 in the United States, 8,000 in Mexico and Latin America, 14,000 in Asia, and the remainder spread across western and eastern Europe.
For all its impressive numbers, Jabil watched its stock sag 30 percent in 2004, starting the year at more than $32 a share and closing Thursday $10 lower at $22.25.
Shareholders Thursday asked Jabil executives a range of probing questions.
Why are there no women or minorities on Jabil's board of directors or among its top management team? "We have not been proactive enough," Main acknowledged, but suggested several female managers at Jabil will move up in the ranks soon.
Whatever happened to that embezzler at your Idaho facility? He was caught and most of what was taken was recovered.
In a moment of levity, one white-haired shareholder asked when Jabil might start paying dividends, instead of plowing earnings back into corporate expansion. Jabil's answer? Probably not soon.
The shareholder's comeback: "I'm 83. Hurry up, will ya?"
Nobody said Jabil or CEO Main were perfect. Still, the well-regarded Institutional Investor magazine this month named Main as the best chief executive in the electronics manufacturing industry.
If Main is as good as the survey says, what makes Jabil tick?
"Know-how" is how Main best described the Jabil culture. The company is experienced. And it has diversified its customer base to take advantage of a trend by big companies to hire manufacturers like Jabil to make the electronics they sell under their big brand names.
That know-how increasingly has propelled Jabil to China. While the country serves as a key location for cheap labor, it is the pursuit of higher electronics expertise that really interests Jabil.
"Shanghai," Main told analysts last month, "is the becoming the center of hardware design for the world."
That statement would have shocked engineering circles not long ago.
No longer. It's time to add places like Wuxi, Ranjangaon and Uzhgorod to our kids' geography classes. Quickly.
Robert Trigaux can be reached at email@example.com or 727 893-8405.
[Last modified January 21, 2005, 00:29:18]
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