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How Jabil Circuit defies the flatlining global economy, for now

Amid talk of more recession, a European meltdown and a slowing China economy, a St. Petersburg company with 100,000 employees worldwide has found a way to defy the global slowdown. For now.

Heads up, business folks. There are some lessons to be learned here.

"The GDP in March was less than a point. Low European growth has not mattered much and Japan is teetering on recession. We put up 23 percent revenue growth in that type of an environment," says Jabil Circuit CEO Tim Main.

"It's remarkable how little macroeconomic trends have mattered to our company this year."

How many companies can honestly say that?

Give Main and Jabil some leeway to crow. The company just announced record annual revenues (its fiscal year ends Aug. 31) of $16.5 billion from $13.4 billion. Earnings rose 126 percent to $381 million.

Jabil is "barreling through the global challenges (and) setting up what we believe will be a high bar that will cause competitors to struggle to match results," said Jabil watcher Jim Suva, a Citi Investment Research analyst.

Jabil started out as a circuit board maker, a contract manufacturer to make parts for companies with names consumers would recognize.

That served Jabil well at first. Now Jabil is far more sophisticated and smarter. Not only does it make electronics worldwide, but Jabil has expanded aggressively into new markets – from smart phones and solar power equipment to complex medical equipment. The company constantly expands or shrinks plants in 24 countries, from the United States and China to many in Europe and Mexico, to match the most-productive and lowest-cost operations to a customer's specific market needs.

In a weak global economy, CEO Main says Jabil leverages a corporate culture honed by rigorous competition. Main calls it a culture of "continuous improvement." It may sound like ManagementSpeak, but here are some examples of what that means:

The company currently is engaged in 14,000 "Blitz Kaizen" events. Never heard of them? You better.

Kaizen (Japanese for "improvement") events are highly focused projects to improve a process typically within two to 10 days. People have little time to think of reasons for delay. It forces solutions. Hence the word "blitz."

Jabil says it has 3,000 employees enrolled in education programs for Six Sigma, an intensive strategy embraced by lean manufacturers to cut product defects.

Jabil also has expanded both its leadership training and its core of engineers.

Even all that is just frosting on the cake. Jabil says it has discovered that what its customers really want is a way to make top products for markets around the globe at the lowest possible cost and the highest possible quality. Main calls simplifying the global supply chain for its corporate customers one of his company's best strengths.

It's all helping Jabil grow swiftly in a flatlining business environment. For now.

"You have to think about other things than the business cycle," Main says.

Now that's competing globally, right here from St. Petersburg.

Will it work for others? Time to get those Kaizens blitzing or get out of the way.

Robert Trigaux can be reached at trigaux@sptimes.com.

How Jabil Circuit defies the flatlining global economy, for now 09/28/11 [Last modified: Wednesday, September 28, 2011 8:25pm]
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