Flex and Nike terminate business relationship

"Regarding NIKE, we have worked hard with NIKE to make our footwear operation in Mexico technically and commercially successful. In recent weeks, however, it became clear that we are unable to reach a commercial and viable solution with NIKE and have mutually agreed to wind down our NIKE footwear manufacturing operation in Guadalajara by December 31, 2018. We are finalizing the terms and details of the wind-down and we are striving to retain many of our affected employees and to repurpose our facility", states Christopher E. Collier, CFO at Flex Ltd. in an analyst call. In connection with the closing of the operation, the EMS-provider recognised USD 30 million of exit costs primarily related to its estimated impairment of fixed assets. Additional costs as the wind-down is completed may be incurred. "I would say that we are disappointed where we sit right now. I think as we step back, NIKE was extremely unique in differentiating and I think that it was an important feature that we went after and we are just being very thoughtful at this stage in terms of where we sit. And since we can't get to a commercial agreement where our shareholders can have a sustainable return, we decided to exit", Collier continues.