Elcoteq postpones plant construction

A major client's decision to outsource mobile phone handset production has a major impact on Wroclaw building plans.
By : Roseanne Gerin

   Elcoteq, a Finnish manufacturer of electronics components, has delayed the construction of its second production plant in Wroclaw until the beginning of 2002, Investor Relations Manager Reeta Kuakiainen said last week. Groundbreaking for the 11,000-square-meter plant had originally been scheduled for this fall.

   Elcoteq made the decision as part of its plans to scale back the expansion of its operations in reaction to Swedish mobile phone giant Ericsson's latest announcement. Late last month, Ericsson said it plans to outsource its mobile phone handset production to Flextronics, a Singapore-based electronics equipment maker. Ericsson was one of Elcoteq's major clients for mobile handsets.

   Elcoteq has manufacturing units in eight countries worldwide, including Poland, where it operates a 3,000-square-meter factory in Wroclaw. The plant employs 180 workers and produces industrial electronics. About 800 workers would be employed at the second Wroclaw plant and produce communications network equipment as well as industrial electronics, Kaukiainen said. The new plant might also produce third-generation equipment, she added.

   "We want more capacity in Poland because it's close to the Western European markets and (labor) is cost effective," Kaukiainen said. She declined to name the Wroclaw factory's current clients.

   Zbigniew Ferdynus, the manager of Elcoteq's Wroclaw plant, refused to comment and referred questions to the company's headquarters in Finland.

   In addition, Elcoteq said it would delay the planned expansion of a manufacturing plant in Tallinn, Estonia, by six months. The company will also stop manufacturing mobile phones for Ericsson at its plants in Tallinn and Pecs, Hungary, but continue to produce them for other clients. Consequently, Elcoteq will lay off about 600 employees at the Estonian plant and about 800 at the Hungarian plant in the spring. Both factories currently employ 3,200 workers each. So far, labor cuts have not been announced for the Wroclaw factory, Kaukiainen said.