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Optical components

Shenzhen Strike Slaps JDSU

Workers at the JDSU (Nasdaq: JDSU; Toronto: JDU) manufacturing facility in Shenzhen, China, have reportedly gone on strike in response to their workplace being sold to Sanmina Corp. (Nasdaq: SANM).

Word of the strike began circulating around the optical components industry late last week. Details are spotty, but a report published this morning by analyst John Harmon of Needham & Co. says the strike is apparently about "demand for compensation for the planned transfer" to Sanmina-SCI.

Earlier this month, JDSU agreed to sell its Shenzhen facility, and the 2,000 employees there, to Sanmina-SCI, which would then become a JDSU contract manufacturer. The deal is expected to close by April 6. (See JDSU Selling Shenzhen Facility.)

In a report published this morning, Harmon cites "numerous sources" that say JDSU's Shenzhen workers went on strike sometime around Feb. 5, the day of the announcement.

JDSU released a statement today that doesn't mention the word "strike" but says the company is "aware of employee issues" in Shenzhen that resulted from the Sanmina-SCI announcement. The statement says JDSU "is actively engaged and working with Shenzhen employees" and with Chinese government entities including the Chinese Free Trade Zone Administration and the Labor Bureau.

By Harmon's estimates, about half of JDSU's optical components revenues come through Shenzhen. So, to account for lowered production that the strike could cause, Harmon is taking his forecasts down a notch for JDSU, figuring revenues for fiscal 2009, which ends in June, will be about $1.3 billion rather than $1.32 billion.

Harmon is also lowering fiscal 2010 revenue projections to $1.35 billion from $1.4 billion. He's keeping a Hold rating on the stock.

Optical communications, including some non-telecom lasers, represented 36 percent of JDSU's revenues in the most recent quarter. (See JDSU Reports Q2.)

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin 12/5/2012 | 4:11:37 PM
re: Shenzhen Strike Slaps JDSU Interesting. So, what is the workers' main complaint? Is it this part?

>JDSU told employee that their benefit will not be changed but new management refuses to sign any contract with employees to assure their employment right.
liaohu 12/5/2012 | 4:11:37 PM
re: Shenzhen Strike Slaps JDSU From JDSU Shenzhen employees, I understood the strike has been going on for a number of days, no goods were shipped for almost a week. JDSU took harsh measure to dismissed 160 striking employees and two sides deadlocked.

JDSU told employee that their benefit will not be changed but new management refuses to sign any contract with employees to assure their employment right.

JDSU handled it very badly and showed no respect to its employees. Even this passed, new management will face a tough time to recover from the bad blood and JDSU's production capability will be impacted for longer term.

DarkWriting 12/5/2012 | 4:11:35 PM
re: Shenzhen Strike Slaps JDSU Looks like the race to the bottom doesn't go over in China any better than it does in the USA. Work their asses off and take pay/benefit cuts just so Lumberg's stock can go up a quarter of a point.

DW
liaohu 12/5/2012 | 4:11:34 PM
re: Shenzhen Strike Slaps JDSU It seems the problem solved. JDSU gave in. It gives the option for employee to take redudent package or stay with written gurantee no benefit cut within 2 years and a retaintion bonus.

Stevery 12/5/2012 | 4:11:33 PM
re: Shenzhen Strike Slaps JDSU Looks like the race to the bottom doesn't go over in China any better than it does in the USA. Work their asses off and take pay/benefit cuts just so Lumberg's stock can go up a quarter of a point.

I believe you have my stapler.
HomerJ 12/5/2012 | 4:11:32 PM
re: Shenzhen Strike Slaps JDSU Ahh General Tao, you are a fierce warrior, but your chicken is delightful.
DarkWriting 12/5/2012 | 4:11:32 PM
re: Shenzhen Strike Slaps JDSU Too bad the strike is over. I was hoping the guy that mumbles a lot would burn down the building. Seems like an odd settlement to me??

DW
danp5648 12/5/2012 | 4:11:29 PM
re: Shenzhen Strike Slaps JDSU Again another win for Enablence and automation. As things go bad for others more people with call Enablence to get the job done.
rahat.hussain 12/5/2012 | 4:11:27 PM
re: Shenzhen Strike Slaps JDSU Enablence wins? Again? Really?


odo <-- amazed to find out that Enablence is a competitor to JDSU

Pete Baldwin 12/5/2012 | 4:11:25 PM
re: Shenzhen Strike Slaps JDSU Here's the full statement JDSU sent this afternoon about the strike being over.

As announced on February 5, 2009, JDSU is selling its manufacturing facility in Shenzhen, China to Sanmina-SCI. The sale will allow JDSU to focus on where we create the most value for customers and have the greatest expertise GÇô namely, in areas that range from R&D to customer service. This sale will also give us greater flexibility in manufacturing.

While there were some labor issues at the Shenzhen facility, production is now proceeding and full operations have resumed. JDSUGÇÖs top priority continues to be the fulfillment of orders with minimal disruption to our customers.

JDSU continues to communicate with the Chinese Free Trade Zone Administration, the Labor Bureau and government officials. JDSU also continues to work closely with employees to ensure that all issues remain resolved in a way that is fair to all parties and allows the plant to continue to create jobs and benefits for its communities for many years to come.
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