October 28, 2014
In a continued effort to optimize our business and invest in future capability and capacity, Kester will be making some changes to where we manufacture some of our products. We recently completed an extensive review of our global product portfolio to determine the optimal location to
produce. This will result in Kester shifting production of certain products from our Singapore factory to other centers of excellence for Kester. We are shifting the production of products in order to eliminate fragmentation and create more scale. This will position Kester for strong growth and allow us to make further investments to enhance our world class operational capability. Below is an outline of the investments that are planned.
• Expanding capacity, upgrading equipment, and automating processes at our factories.
• Adding headcount to our sales and field application teams in key regions, including Asia-
Pacific and Europe.
• Strengthening our R&D capability and expanding our product development pipeline at our
Itasca R&D Center of Excellence.
• Investing in key product lines that will continue to fuel growth.
• Increasing our external marketing communication programs.
These investments will make Kester an even stronger global partner to our end customers, distributors and sales agents. It will enable us to better support our customers globally, drive new product innovation, and further strengthen our product quality. Below is a brief overview of the
product shifts that will take place. We will provide dates for samples and first-orders by December 1, 2014 for the impacted products.
• Factory in Itasca, IL USA will be the Center of Excellence for all global metals (bar, wire,
preforms) and paste flux manufacturing.
• Paste blending and liquid flux for high-volume products will be done in regional Centers
of Excellence: Itasca (North/South America), Germany (EMEA), and Wujiang (Asia-Pac).
• Paste blending and liquid flux production for low-volume products globally will be done in
our Itasca, IL Center of Excellence.
In addition to positioning Kester for high growth, our other top priority is ensuring that Kester continues to be a strong supplier and partner to our customers. Whilst customers may be ordering products from a different factory than the one they currently use today, we will ensure
that there are no disruptions no matter where you are located and where your product is manufactured. You can continue to expect the following from Kester:
• High-quality, copy exact products with equivalent performance and specifications;
• On-time delivery and competitive lead times;
• Best-in-class technical support from our in-house and field teams; and
• Fast and responsive support for orders and other inquiries.
We are taking very careful steps to ensure that products are copy exact and product performance and quality is unchanged. Many of the products produced in our Singapore facility are currently made at our factories in Itasca and Germany. We are already scaling-up a number of these
products in our Wujiang China factory. All impacted products will also be thoroughly tested including the applicable IPC, QC and applications tests. All products will be produced using our globally-approved and qualified work instructions, test methods, and raw material suppliers. Our Singapore facility will continue to produce these products throughout the transition to further ensure that there are no disruptions to our customers.
WUJIANG PLANT UPDATE
Additionally, I would like to share an update on our new factory in Wujiang, China. The construction is mostly complete and the equipment installation is on track per our plan. However, the Wujiang Land Bureau and the Wujiang Economic Development Zone (“WJDEZ”) recently notified us that it will take longer to approve the land plan adjustment and related permits. This is NOT a result of any issues with ITW or Kester. The Land Bureau and WJDEZ is continuing their review and approval of our land plan and related permits. They told us to expect a 2-month delay. This has delayed our flux qualification runs since flux is classified as dangerous goods. The paste qualification runs are still on track and proceeding as planned. We will provide revised dates for samples and first-orders by December 1, 2014.
Please let your Kester Technical Sales or Customer Service Rep know if you need further support (e.g., samples) from Kester in order to approve this change and begin ordering product from the new Kester manufacturing location. Our team is ready to support you and ensure that this is a
We would like for you to acknowledge that you have received this notification letter by returning a signed copy of the acknowledgement form on the next page. If we have not received a returned acknowledgement form by November 24, 2014, we will assume that you have received this letter
and have no additional questions.
Lastly, if you are a distributor of Kester products, it is imperative that you cascade this information to all of your customers impacted by this change. They should have the information in a timely manner. Please also acknowledge this has been done on the attached acknowledgment form by November 24, 2014.
We understand that shifting the manufacturing location of products will require some effort from our customers, distributors and sales agents as orders move to the new Centers of Excellence for each category. We are excited about these investments and believe they are a critical step to
position Kester for strong and aggressive growth globally. Our focus is and always will be on producing and shipping only the highest quality products to our customers. Through extensive planning and preparations we are highly confident in our ability to manage this transition and to
ensure that there are no disruptions to supply. We appreciate your continued support of Kester.
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