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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
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