Big Blue outsources NetVista production

IBM has signed a $5bn (£3.48bn), three-year outsourcing agreement with Sanmina-SCI. The deal will result in Sanmina taking over...

IBM has signed a $5bn (£3.48bn), three-year outsourcing agreement with Sanmina-SCI. The deal will result in Sanmina taking over most of IBM's NetVista desktop PC line manufacturing operations.

IBM claimed that the deal will lower costs and reflects the tech industry's trend toward outsourcing. End-user pricing will not be affected by the deal, according to the company.

Sanmina-SCI will take over NetVista manufacturing in the US and Europe, acquiring IBM plants, equipment and staff in Research Triangle Park, North Carolina, and Greenock, Scotland. IBM stated that 900 employees in North Carolina and 82 employees in Scotland would be offered jobs with Sanmina-SCI. There would be no job cuts associated with the outsourcing, and all employees will be offered jobs at their current salary. "It's the same location, same manager, same plant - they're just switching badges," said an IBM spokeswoman.

IBM's ThinkPad line of notebook computers is not included in the contract.

Currently manufactured in-house, the ThinkPad line is unlikely to be outsourced because "we can still innovate there," said Fran O'Sullivan, IBM's general manager of PC products and services. Desktop PC components "have become more of a commodity," O'Sullivan said. IBM will continue to handle all aspects of designing and marketing the NetVista series.

The deal will take effect in February. IBM will retain its NetVista manufacturing operations in Mexico and elsewhere in Latin America, according to an IBM statement. Although operations at IBM's manufacturing plant in Mexico, may be affected by the Sanmina-SCI deal, IBM is likely to retain ownership of the plant, which handles some NetVista manufacturing but focuses primarily on production for other IBM lines, O'Sullivan said.

Sanmina-SCI currently handles the manufacture of one PC model from IBM's NetVista A Series line.

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