IBM Hires Outsourcers For Assembly WorkIBM Hires Outsourcers For Assembly Work

IBM has spent years pushing its technology outsourcing business. On Tuesday, the company switched gears and hired a pair of contractors to assume some of its own assembly work.

IBM will pay $3.6 billion to assembly contractor Sanmina-SCI Corp. and $120 million to Solectron Corp. to manufacture or refurbish IBM desktop computers and low-end servers. As part of the three-year deals, about 1,300 IBM employees whose jobs will be cut will get job offers with similar pay and benefits from the two companies.

Sanmina-SCI and Solectron have also agreed to buy or lease--for an undisclosed amount--IBM's affected assembly plants and equipment in Research Triangle Park, N.C.; Guadalajara, Mexico; and Greenock, Scotland.

Sanmina-SCI gets the larger deal. It will acquire IBM's server and desktop manufacturing and distribution operations in Mexico and Scotland. IBM will continue to manufacture most of its ThinkPad laptops in Shenzhen, China, but Sanmina-SCI will handle some custom laptop configurations, an IBM spokeswoman says.

Solectron will take over a large part of IBM's Global Asset Recovery Services, which restores end-of-lease PCs and other equipment that's resold. Solectron also will buy IBM's refurbishing center in Research Triangle Park. Terms of that deal were not disclosed.

IBM has long sought to cut costs on its money-losing desktop PC and laptop businesses, to which IBM executives have said the company remains committed. It's happy with its year-old, $5 billion PC manufacturing contract with Sanmina-SCI, which has reduced manufacturing time on IBM desktops by 25%, the spokeswoman says. Sanmina assumed IBM's entire U.S.-based PC manufacturing business last year.

On Dec. 31, IBM moved further from manufacturing, completing the $2.1 billion sale of its disk-drive business to a joint venture led by Japan's Hitachi Ltd.