Solectron said today that it may have to cut up to 850 jobs, or about 2 percent of its total work force, as a result of moving its cell phone production to a facility in Guadalajara, Mexico.
The company, one of the largest contract manufacturers for the electronics industry, said it would move production of cell phones out of its Suwanee, Ga., facility to a plant in Mexico "due to changing market conditions."
In the process, which is expected to last through July, about 850 positions will be eliminated, although Solectron said that more than 700 employees will continue to work at the plant on other products.
"Simply put, most of our competitors and customers have already moved cell phone manufacturing to lower labor-cost geographies, and we must take this action to remain competitive," Fred Forsyth, president of Solectron Americas, said in a statement.
Solectron said the moves would not affect its financial outlook in 2000, but the company's stock moved south anyway, declining $2.56, or 6.25 percent, to $38.44 in morning trading.
The company's stock has declined about 19 percent this month. Overall the stock has done well, however, doubling in value since 1999, resulting in another stock split in January.
The company recently negotiated to take over manufacturing plants from Nortel Networks in return for a four-year, $10 billion supply agreement. Solectron said it would retain about 4,200 Nortel workers at the acquired sites.
With today's deal, cell phone manufacturing facilities will be transferred in phases during the next four months while production is shifted to Solectron's plant in Guadalaraja, according to the company. The first reductions will begin in May.