By KRYSTLE CHOW
Published in the Ottawa Business Journal newspaper and website.
May 30, 2011 (May 31 on OBJ.ca)
Click here to view this article on OBJ.ca.
Sanmina’s Ottawa operations are making strides in clean tech, including manufacturing solar inverters.
While there are always fears of a local company being hollowed out after being acquired by a foreign or multinational firm, Cyril McKelvie says there’s been a lot of reassurance on that front since San Jose, Calif.-based Sanmina-SCI bought Ottawa manufacturing firm BreconRidge Corp. for US$53 million in May 2010.
As the merged companies mark the acquisition’s anniversary, Sanmina’s local operations now have “somewhere north of 500 employees” and customers in new markets not previously served by BreconRidge.
“It feels to me (as though) we’ve got a partner here with a very strong balance sheet and global footprint, that sees us as an asset,” says Mr. McKelvie, the former CEO of BreconRidge who’s now executive vice-president of Sanmina’s optical microelectronics division. “They didn’t do (the acquisition) to strip us out, but to grow us, and that’s the only message I’ve received throughout.”
He acknowledges the acquisition resulted in “synergies,” which did lead to an unspecified number of layoffs that mostly affected employees in corporate functions. However, he says manufacturing and engineering staff, to a large extent, remained intact.
“The essence of the value-add for the operations left here is still very much in play,” notes Mr. McKelvie. He points in particular to BreconRidge’s historical stronghold in the optical technology manufacturing space, which harks back to the company’s genesis as a Mitel offshoot that later bought Nortel’s high-speed modules business.
“That (Ottawa) facility today is a centre of gravity for (Sanmina’s) optical microelectronics division.”
Mr. McKelvie says customers have mentioned how the acquisition was a “game-changer” for Sanmina, especially given the buzz around optical communications technology.
That’s a thought echoed by John Haydon, who’s witnessed BreconRidge’s evolution both from inside and outside the company. Mr. Haydon was at Nortel when BreconRidge was spun out of Mitel, witnessed the purchase of Nortel’s technology, and then became BreconRidge’s president and chief operating officer in 2007. He later also served as a senior executive at optical networking products maker BTI Systems, a BreconRidge customer.
“From a customer standpoint, it’s always good to see suppliers expanding their footprint and adding different capabilities … and BreconRidge was very strong in the optical/wireless telecom space,” says Mr. Haydon, who’s currently chief supply officer for Sanmina client Philips Healthcare.
He says the acquisition was good for everyone involved, including employees, since they will now benefit from the security of being part of a global company. That stability extends to clients and suppliers as well, he adds.
The merger solves the issue of BreconRidge’s scalability, adds Guthrie Stewart, a private equity adviser who was previously involved with BreconRidge investor EdgeStone Capital Partners and also served as the manufacturing firm’s chairman.
“When you get to manufacturing and assembly, it’s not just about the raw brain power needed for engineering and design; it’s a game of efficiency and scale matters,” says Mr. Stewart, who notes BreconRidge’s ability to grow was a concern from day one.
Mr. Stewart says his impression of how things have progressed following the acquisition is positive as well, with Sanmina showing a commitment to growing BreconRidge’s core engineering expertise and making Ottawa a centre for new innovation.
Meanwhile, Sanmina’s strengthened Ottawa presence has led to a slew of new partnerships with clients looking to participate in Ontario’s Feed-In Tariff renewable energy program, including two recent deals to manufacture solar inverters for U.S. companies Emerson and Santerno at the firm’s local facilty.
It’s still a new market, but Mr. McKelvie says it’s an area that’s slowly gaining momentum, and one that provides opportunities for integration with the company’s optical technology.
The bottom line, notes Mr. McKelvie, is that Sanmina is in Ottawa to stay. “The asset in Ottawa is very important, and Sanmina is expecting that asset to be here in the long term. As ex-president (of BreconRidge) … I feel good about that and the customers feel good about that.”