March 24, 2005 Fremont, CA -- Avanex, a developer of intelligent photonic devices for optical networks, today unveiled an operations center near Bangkok, Thailand. According to the company, the facility will centralize global manufacturing and operational overhead functions in a low-cost region.
"The operations center gives us the capability to meet our customers' needs and substantially reduce both our fixed and direct costs of manufacturing," explains Jo Major, president and CEO of Avanex. "The consolidation of our operational infrastructure, with both production and technical staff near our contract manufacturing partners, will also result in faster product introductions."
According to the company, opening the facility marks a significant milestone in its overall plan to reach profitability. Through this strategy, the company believes that it will see meaningful improvements in gross margins over the next year, as manufacturing costs are reduced throughout its North American and European locations. When fully implemented, the operations center is expected to reduce the company's cost structure by $8 to $12 million per year.
In December 2004, the company reduced its North American workforce by 200 employees in a move to outsource manufacturing to low-cost areas. The company says its Thai operations center will enable the transfer of further activities from all its facilities, which should improve its cost structure in future quarters. The first full quarter of savings is expected in Q2 of fiscal 2006, according to the company.