Raymarine to outsource manufacturing
By IBI Magazine
Raymarine, a UK manufacturer of marine electronics to the leisure boating market, has announced that, subject to final consultation, it has decided to outsource all of its UK manufacturing operations, resulting in the closure of manufacturing operations at its Anchorage Park facility in Portsmouth. The group will, however, retain its research and design operations, sales and marketing, and group functions in Portsmouth. Around 250 employees will be potentially affected as a result of the announcement.
The Board estimates that the proposed outsourcing is likely to lead to annual savings of approximately £5 million in 2007, £10 million in 2008, £10.5 million in 2009 and £11 million from 2010 onwards. No material savings are likely to be achieved in 2005 or 2006 in view of the costs of the transfer.
The Board has decided on a preferred outsourcing partner and will spend the next few weeks negotiating detailed contractual terms. Thereafter, the migration of facilities to the selected outsourcing provider will commence in August of this year and will complete early in 2007.
"The outsourcing of our UK manufacturing operations is essential for Raymarine to remain competitive in today's markets," says CEO Malcolm Miller. "A number of our competitors already have manufacturing operations in lower cost environments. We are acutely aware of the impact this will have on our employees and of Raymarine's responsibilities in this regard. We are sympathetic to this and are therefore striving to support our employees wherever possible in the form of outplacement and re-training advice. Today's decision aims to maintain Raymarine as a global leader in the supply of marine electronic products to the leisure boating market, a position which we will continue to drive forward from our head office in Portsmouth." On May 3, the group announced that it was in discussion with potential outsourcing partners over how best to continue to produce high quality products at the lowest possible cost. Shortly after this, the Board received written proposals along with formal presentations from a number of potential outsourced manufacturing service providers. These proposals were based on a detailed job specification and, as a result, provided comparable analysis on a number of important commercial factors including the potential for cost savings, how an efficient and streamlined transfer of manufacturing could be achieved, the likely timetable for the transfer of any manufacturing operations and how Raymarine could be certain that the high quality and reliability of its products would be maintained. Following receipt of these proposals, a Raymarine management team completed an analysis of the risks and potential rewards of the various proposals. Alongside these discussions, the group also commenced a formal 90-day consultation process with those employees potentially affected. This was necessary to enable the Board to take into account the results of the employee consultation in reaching a decision whether, and to what extent, a larger proportion of the group's manufacturing should be outsourced in future. The Board has now considered the options available to it and has decided, subject to final consultation, to outsource all of its UK manufacturing operations with the resulting closure of manufacturing operations at the Anchorage Park facility in Portsmouth around the end of 2006. The group will, however, retain its research and design operations, sales and marketing, and group functions together with its service and repair facilities in Portsmouth, UK, and the facilities and functions in Merrimack and Ft Lauderdale in the US. Distribution of products to customers will be unaffected by this change.
(5 July 2005)
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