Motorola and Celestica enter $1 billion alliance

Motorola and Celestica announced yesterday, December 6, that they have announced a strategic manufacturing alliance with a total estimated value of more than $1 billion over a three-year period.

Under the terms of the agreement, Motorola will sell its manufacturing operations in Dublin, Ireland, and Mount Pleasant, Iowa, to Celestica for approximately $70 million subject to post-closing adjustments and will outsource the manufacturing of some cellular phone handsets, messaging devices, two-way radio products and accessories to the company.

This is the second major outsourcing agreement Motorola has announced this year. The agreement is believed to form part of a long-term, company-wide strategy to improve supply chain efficiencies, consolidate manufacturing and restructure to improve financial performance and build on company strengths.

The agreement is expected to close in first quarter of 2001. Celestica will continue manufacturing some Motorola cellular phone handsets, messaging devices, two-way radio products and accessories for at least three years at the Mount Pleasant facility and two years in Dublin.

‘Celestica is very pleased to enter into this significant relationship with Motorola, a strategic telecommunications customer,’ said Eugene Polistuk, Celestica’s president and chief executive officer. ‘This announcement further strengthens Celestica’s position as a world leader in the EMS industry, specifically in the rapidly expanding wireless telecommunications sector.’

As a result of the agreement, Motorola’s US Boynton Beach manufacturing facility will be converted to concentrate on software applications, product design activities and administrative support.

Pager Care Centre operations will be transferred to Motorola’s Fort Worth, Texas, facility, while manufacturing will shift to Celestica in Dublin. The Dublin facility will also continue to manufacture cellular phone handsets for Motorola. Prior to closing the sale, Motorola will consolidate operations in Mt. Pleasant to a single facility.

For Motorola, the manufacturing consolidation will result in the loss of approximately 2,870 positions out of the total workforce of 130,000. Celestica will offer positions to approximately 650 of Motorola’s 1400 Dublin employees and 550 of the 670 Mount Pleasant employees. Of the 800 affected Boynton Beach employees, 100 will be eligible to transfer to Motorola’s Fort Worth facility, and another 250 will be eligible to transfer to Plantation.

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