Rumours that much of the company's European production were being moved to Asia abounded around the town. It would appear, however, that the European reorganisation is following in the footsteps of what has already been done in Asia and the Americas. For the half-year to September 2001 the company announced operating profits of £2.9M which were down from £18.1M in the same period for 2001. Subsequently, a profits warning was issued on 19 December 2001. Today's press release (7th january 2002) from the company is cited below:

Major Restructuring of Operations in Europe


As indicated in its trading statement on 19 December 2001, Volex Group p.l.c., the world’s leading independent producer of electronic cable assemblies and electrical power cords, announces it has taken a major initiative to streamline its European operations and at the same time further reduce its cost base.

In line with the changing structure of the Group’s world-wide markets for its infocom and power cord products, particularly the growing presence of multinational CEMs (contract electronic manufacturers), Volex intends to merge its European based infocom and power cord assembly operations. This brings Volex’s European structure in line with that already existing in the Americas and Asia.

This new European organisation will be headquartered in Ireland and will include the Group’s UK powercord operations and satellite manufacturing plants in Sweden, Estonia and Croatia. The establishment of this new structure will involve major reorganisation of the Group’s existing plants in Leigh, England, and Castlebar, Ireland. Overall the numbers of employees throughout Europe in this business area is expected to be reduced by some 50% to approximately 450: of this approximately 50% will be located in Ireland, 30% in Eastern Europe with the balance being in the U.K. and Sweden. In addition, certain production will be transferred to the Group’s plants in Asia, so absorbing capacity available in that region and taking advantage of lower unit costs. This reorganisation does not affect the Group’s UK harness businesses.

The new European organisation enables Volex to offer a "one stop shop" to its customers in the region for both infocom and power cord cable assemblies. It is also right sized against today’s demand levels and achieves a lower cost base by taking advantage of economies of scale.

This fundamental reorganisation will cost approximately £6m, of which some £4.5m will be in cash, and will be charged as an exceptional item in the 2001/2002 accounts: the benefits are anticipated to bring cost reductions in a full year of some £3.5m before tax. Once completed the Group’s operating profit margins will return to more satisfactory levels against today’s market demand and this reorganisation positions the Group to take fuller advantage of the changing global market opportunities, particularly with the emerging CEMs.

The Group will consult with those employees and trade unions affected by these changes and it is envisaged that the reorganisation will be completed largely by the end of March 2002.