Faro Technologies to Outsource Manufacturing
FARO Technologies has announced the signing of an agreement to outsource its manufacturing to Sanmina Corporation, a US-based Fortune-500 Electronic Manufacturing Service (EMS) provider.
“As the next step in our business transformation, we plan to transition FARO production from our three manufacturing sites in Lake Mary, Florida, Exton, Pennsylvania and Stuttgart, Germany to Sanmina,” stated Michael Burger, President and Chief Executive Officer. “Following a rigorous selection process, we selected Sanmina as our partner based upon their proven ability to deliver quality products on required timelines. Together, we are confident in our ability to meet customer demand throughout the transition process.”
“While this decision is not easy as it directly affects FARO employees, once complete our new operational model greatly simplifies operations, reduces costs and allows our management team to focus on the development and sale of differentiated technology to customers in our target markets,” Burger continued.
The phased transition to a Sanmina production facility is expected to be completed over the next twelve months and result in approximately $12 million in annualized labor and material savings when complete. FARO believes the expected savings will have a negligible impact on 2021, followed by steady improvement through 2022, with the full benefit to be realized in the first quarter of 2023.
The Company expects to incur a cash charge of approximately $6 million in the second half of 2021, primarily consisting of cash severance and total pre-tax charges of $15 to $20 million through the first half of 2022 when including the impact of facility and other asset write-downs. With these charges, the Company expects it will fully realize the $75 to $85 million in restructuring charges announced in February 2020.
For more information: www.faro.com
