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Tech Industry

Celestica taking over HP plant

By leasing out its Andover, Massachusetts, plant, HP continues its aggressive adoption of the contract manufacturing model.

Celestica will shortly expand its high-tech manufacturing operations when it takes over a Hewlett-Packard facility in Andover, Massachusetts, and another company's assembly plant in the Czech Republic.

In coming months, Celestica will begin leasing HP's 26,000-square-foot Surface Mount Center, currently used to build electronics parts for HP's Medical Products Group. All 125 employees will be offered jobs with Celestica, and Celestica will take over the plant's equipment, both companies said yesterday.

In addition, the company announced a planned acquisition of a 50,000-square-foot plant in the Czech Republic used to build computers, printers, cell phones, and test equipment. Celestica will take over operations from a German company, Gossen-Metrawatt, a subsidiary of the Roechling Group. The new plant will be Celestica's seventh in Europe.

Celestica will continue making products for HP at the Andover site, which is used for making printed circuit boards.

Financial terms of the agreements were not disclosed.

The Celestica deal continues HP's aggressive adoption of the contract manufacturing model, in which outside companies handle manufacturing tasks while the main company concentrates on designing, marketing, and supporting its products. Contract manufacturing has been growing faster than the high-tech industry, with analysts projecting that an increasing fraction of new products will be built under this model.

Solectron is the largest contract manufacturer, with former leader SCI Systems in second place and Celestica in third.

Although contract manufacturing business is growing, a popular strategy in the industry has been to acquire new facilities. In recent years, Celestica has snapped up at least a dozen, one step behind Solectron, with 13.

The acquisition of the Andover operation expands Celestica's geographical presence and marks the company's first foray into medical products manufacturing, the company said. The company acquired eight plants in 1998.

Acquisition is a relatively easy way for contract manufacturers to expand their geographic presence, a move that makes them more desirable manufacturing partners for companies hoping to push into new territory.