XP Power to bring contracted manufacturing in China in-house

20 February 2012

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20 February 2012 | Adam Leach

Electrical component supplier XP Power is to move all manufacturing of its own products to its own factory in China to give buyers more confidence in them.

In annual results published today, the company said as a result of increasing demand from customers for greater quality control and more flexible lead times, it will transfer the manufacturing it currently outsources to Chinese suppliers to its own factory in Kunshan in China.

The factory will handle manufacturing for all of the companies final products, such as AC/DC power supplies for use in healthcare equipment such as MRI scanners.

Components used in the manufacturing will be made at the company’s new factory in Vietnam and be bought from suppliers.

XP Power chief executive Duncan Penny said in a statement: “Given our major customers’ requirements for complete control over the manufacturing process, combined with the softening in market demand we experienced in the final quarter of 2011, we have taken the decision to transfer manufacture of all remaining products to our facility in Kunshan.”

The transfer from contracted manufacturing, which accounts for around 40 per cent of output, to full in-house operations will be completed by the end of 2012. In order to aid the transfer the company will increase inventory levels in case of any disruption.

The construction of a new component manufacturing facility in Ho Chi Minh City in Vietnam was completed in December. The business said this would primarily be a magnetics facility and would extend the company’s control over manufacturing. “This vertical integration enhances our value proposition to key customers who increasingly demand rigorous control of the supply chain,” added Penny.

This factory will also enable the company to “mitigate against rising wage costs and currency appreciation in China” and provide “shorter lead times”.

Last year the company made after-tax profits of £20.3 million, a 28 per cent rise on the £15.5 million made in the year previously.

 

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