Electronics Production | December 28, 2008
Day4 Energy in outsourcing agreement with Jabil
Day4 Energy has signed a long-term manufacturing supply agreement with Jabil Circuit.
Under the terms of the multi-year agreement Jabil will purchase from Day4 Energy certain equipment required for the manufacture and supply of the modules and produce Day4 Energy's brand of modules for residential and commercial applications. "The outsource strategy is a key component of our business plan offering a number of advantages including a step-function improvement in our cost structure with substantial photovoltaic module assembly cost savings, significant working capital expense reduction, and a natural hedge to foreign exchange effects by geographically aligning our production with our key sales locations," said George Rubin, president of Day4 Energy. "Day4 will provide the solar cells based on our proprietary designs and Jabil's manufacturing expertise and supply chain power will allow us to enhance the efficiencies of photovoltaic module manufacturing. By partnering with Jabil we can focus on our core areas of expertise and value creation for Day4, namely R&D and sales and marketing." "We believe that our proven technical and manufacturing expertise, coupled with Day4 Energy's superior product offering, is a strong combination. This partnership expands our clean technologies portfolio by developing a foothold in the solar industry, a market we believe has tremendous growth potential and can benefit from our economies of scale, optimized supply chain and standardized global operating systems," explained Brian Althaver, Jabil vice president of strategic development. George Rubin added, "This relationship streamlines the company's cost structure and takes advantage of our flexible business model. With the fundamental near-term shifts occurring in the solar sector, our strategy is to reduce working capital costs, and ensure that we are in a good position to take advantage of the significant reductions we expect in materials costs over the next couple of quarters. We are seeing continued strength in demand for our product in Europe in the residential and commercial applications and remain confident in our contracted sales for 2009." Rubin continued, "We will focus on managing production to effectively and efficiently meet the best timing and geographical demand for 2009. Given the broader economic environment and seasonal weather patterns we are being proactive in managing our business to avoid inventory build-up. We expect to have the equipment installed at the Jabil facility in Q1 and to be operating at full capacity as we enter the second half of 2009. This timing coincides perfectly with the expected demand cycle as it capitalizes on the normal seasonality from December through the first quarter. The overall strategy not only aligns our cost structure with the near term it ultimately puts the company in a better position to expand and grow in the future by focusing on those parts of the business that drive the highest returns."