Jabil adjusts to new leadership team, challenges [Tampa Tribune, Fla.]

(Tampa Tribune (FL) Via Acquire Media NewsEdge) March 03--ST. PETERSBURG -- Jabil Circuit started as a supplier to Detroit's auto industry, but since moving to St. Petersburg it has expanded into other areas including health care with its purchase of a manufacturer of plastics and packaging.

When Bill Morean moved Jabil Circuit from Detroit to St. Petersburg 30 years ago, he wanted to capitalize on the area's relatively cheap land, strong manufacturing workforce and proximity to what was a large IBM Florida operation at the time.

Today, only a fraction of the company's manufacturing is done locally, and its operations span 33 countries worldwide in industries ranging from health care to energy.

Jabil's evolution from its roots in Michigan's automotive industry into computers and, now, a myriad of fields demonstrates that a successful Fortune 500 company doesn't have to be located next door to its biggest clients, especially if those clients are spread across the world.

As a new upper-management team officially takes over this month, Jabil executives say the $17 billion company is well-positioned for growth in health care and "green" technology.

Longtime CEO Tim Main officially replaced Morean as board chairman Friday, following a retirement announcement last year. The company's chief operating officer, Mark Mondello, stepped into the chief executive job.

Both men have a lengthy history at the company. Main joined Jabil in 1987 in Michigan as a production manager and moved into the role of CEO in 2000. Mondello came out of the aerospace industry and joined Jabil in 1992. He became the company's chief operating officer in 2002.

"There's a whole lot to be said about the success, the stability we have in our management team," said Morean, who is enjoying daily views of snowy mountains at his cattle ranch in Montana.

The son of one of the partners who founded Jabil, William E. Morean, Bill Morean retired after 35 years at the company.

During his tenure, he oversaw the company's transformation from a modest player assembling circuit boards for General Motors into a global company that offers advanced manufacturing for major brands such as Hewlett Packard and Cisco Systems.

Jabil now employs 165,000 people, manufacturing touch screens for smart phones in Asia, defense technology locally in St. Petersburg and computer circuit boards in factories across the globe. The company has also made a significant expansion into the health care industry, punctuated by its recent acquisition of Nypro, a Massachusetts-based manufacturer of plastics and packaging.

The company's traditional mainstay has been electronic circuit boards, but it has expanded its expertise in advanced manufacturing, making control equipment for John Deere farm machines, meters that monitor home energy use and all the nonelectronic components used in the iPhone, including the metals, plastic and glass.

Despite economic uncertainty in the European and Asian markets, the key to Jabil's future growth is the same thing that fueled its past success: finding ways to apply its expertise to new industries, said Main.

In 2000, clean technology, health care and other specialized services were inconsequential to Jabil's overall strategy. But these areas will make up more than 50 percent of its business by next year, Main said.

After a slump following the recession, Jabil bounced back with three consecutive years of record revenue.

The company's net revenue for the 2012 fiscal year was $17.2 billion, up from $11.7 billion in 2009.

The company's $665 million acquisition of Nypro bodes well for its expansion into diversified manufacturing services in the health care field, which has higher margins than Jabil's traditional electronics manufacturing, according to a February report from Fitch Ratings.

The Fitch report cited the company's strong management team as one of its strengths, along with its position as one of the world's largest electronics manufacturing services vendors and favorable trends for outsourcing in the industrial, medical and clean tech industries.

One of the credit-rating agency's concerns was that Jabil's Top 5 customers accounted for 48 percent of its revenue in Fiscal Year 2012. That means when large customers such as Apple experience slumps in sales, Jabil's fortunes can suffer.

The recession was tough on Jabil.

At its peak, the company employed 2,000 people locally in manufacturing and corporate roles at its North St. Petersburg office on Martin Luther King Jr. Street. Today, the company employs 1,600 people here.

The 2008 recession halted plans to hire more workers locally and build a new headquarters on a 90-acre parcel on Gandy Boulevard. The company has laid off several hundred workers in recent years, particularly at its local manufacturing facility, though hiring in high-skilled and professional jobs is up over the past year.

Jabil's St. Petersburg manufacturing plant has laid off workers in recent years due to shrinking defense industry business, and looming defense cuts don't bode well for local manufacturing. But rising costs in Asia may drive more production of bulky equipment back to the United States, Main said.

"We're making some aggressive proposals to customers to move some portion of their manufacturing to the U.S. because it makes sense for them now," he said.

Now emerging from the recession, Jabil seems firmly rooted in St. Petersburg.

The quality of life in Pinellas County still makes this an ideal place for attracting and retaining corporate talent, company officials say.

"[St. Petersburg is] still a very attractive place to live and it's still ... attractive financially," Morean said.

"Our business is so global and the tools we've developed to deal with that and our infrastructure is so advanced that you could probably headquarter just about anywhere." Recognizing Jabil's importance to the region's economy, local and state leaders offered the company a $12.4 million incentive package in 2008, when it was considering a move out of state. The company never accepted the package, which was tied to its prerecession plans to hire more local workers and build a new corporate headquarters.

Jabil still gets offers to move from other places, in and out of Florida, but company executives are comfortable in St. Petersburg, Mondello said.

"It's a great place to live. The weather, water, the downtown area has certainly been revitalized. It's kind of a hip place to be," he said.

"We love Pinellas County, and we'd like to continue to see it be our headquarters." That's good news to local economic officials, who say the company's presence is critical to attracting other businesses in technology and advanced manufacturing, which have made Pinellas the state's second-largest base of manufacturing employment.

While Jabil was not the first major corporation to relocate to the county, its profile as a Fortune 500 company, along with Tech Data in Clearwater, has built the area's reputation as a major business hub, Pinellas County Economic Development Director Mike Meidel said.

"It's a powerhouse company, and it gives us national exposure that we wouldn't have otherwise," he said.

The real source of Jabil's importance to the local economy goes beyond direct employment, county economic officials say.

The company generates $334 million in payroll through salaries paid to its employees and the money they spend at local businesses, spurring additional job creation, according to the economic development office.

"These people are well paid. They tend to have a lot of engineering staff and design people and senior management, so they have a lot of disposable income and they go out in the community and spread that wealth around," said Meidel.

Many Jabil executives live in downtown St. Petersburg and frequent its wide array of museums and restaurants, Morean said. His sister, Beth, has given financial support for the city's cultural attractions, making a substantial donation to what is now called the Morean Arts Center.

The hotels and retail centers in St. Petersburg's Gateway area can be traced to large companies in that part of town, including Jabil and Raymond James, Meidel said.

Jabil's innovation also attracts other industries to the area. For example, the company operates a state-of-the-art clean room for developing disposable medical device prototypes utilized by health care companies.

Having local expertise such as you find at Jabil means other companies who work in the medical field can get their needs met here rather than taking their work or research outside the county, Meidel said.

"That keeps more of the money here. So instead of them having to buy from somebody else, they can buy those services locally," he said.

Over the next year, company officials may decide whether to go forward with building a new headquarters, which would bring a handful of satellite offices in the county under one roof, Mondello said.

Mondello, who was part of the management team that planned Jabil's current business strategy to diversify into other industries, said he doesn't plan on making "revolutionary" changes now that he's in charge.

Two other Jabil executives with more than 20 years at the company have also moved into top roles: Bill Peters will be the new company president, and Bill Muir is the new chief operating officer.

"We were fortunate to have people from within the company as kind of the next generation," Main said.

As for Morean, aside from tending to 500 head of cattle, he'll continue to offer guidance to Jabil's executives and said he's always looking for opportunities to help the company expand, including a possible move into sustainable agriculture.

Best of all, he's enjoying not having to show up at the office.

"I no longer have any direct responsibilities, which feels really good after 35 years," he said.

___ (c)2013 the Tampa Tribune (Tampa, Fla.) Visit the Tampa Tribune (Tampa, Fla.) at www.tampatrib.com Distributed by MCT Information Services

[ Back To Technology News's Homepage ]