After posting its first half-billion-dollar year, contract electronics manufacturer Benchmark Electronics Inc. is looking to expand in 1999 with increased box-build operations in Europe.
The Angleton, Texas-based CEM announced last week that it had signed an agreement with Stratus Computer Holdings Ltd., Marlboro, Mass., to acquire assets and transfer employees from Stratus' plant in Dublin, Ireland, to a recently opened Benchmark plant in Dublin.
As part of the agreement, Benchmark will provide systems integration and testing services for Stratus and its parent company, Ascend Communications Inc., Alameda, Calif.
Stratus is a manufacturer of fault-tolerant computing systems for the banking, gaming, and telecommunications industries. Following Ascend's acquisition of Stratus last fall, the companies decided to outsource assembly of future Stratus systems.
Earlier this month, Lucent Technologies Inc. moved to acquire Ascend in a $20 billion deal expected to be completed by July.
Donald E. Nigbor, president of Benchmark, said the Lucent deal should not affect Benchmark's agreement with Stratus and Ascend. He added that Benchmark will likely begin completing some assemblies for Lucent after the Ascend acquisition is finalized.
The Stratus-Ascend agreement will be one of Benchmark's first major pushes into full-system, or box-build, contracts. At present, about 10% of Benchmark's revenue is generated through such contracts.
"It's a significant trend in the industry to do more box-build, and this is a great opportunity for us to continue to roll in that direction," Nigbor said.
The CEM leased a 45,000-sq.-ft. plant in Dublin last September, which it has been ramping into board assembly. Under the agreement with Stratus, Benchmark will transfer test and integration equipment into the Dublin plant, and will move the existing 200 Stratus workers into the new Benchmark facility.
The move into Ireland is part of a global expansion effort for Benchmark, and Nigbor is hoping the company will make strides in that effort over the next 12 to 18 months.
Benchmark currently has manufacturing plants at its Angleton headquarters, as well as in Hudson, N.H.; Beaverton, Ore.; and Winona, Minn.
The company plans to add a facility in Asia sometime this year, and is also considering branching out into Mexico and South America, Nigbor said.
Benchmark reported net income of $16.4 million on revenue of $524 million for calendar 1998, an increase from net income of $15.1 million on revenue of $325 million the previous year.