Jabil: Fortune 3?

This short profile of Jabil Circuit in Fortune this week calls out a couple of notable facts:

  • Jabil’s earnings per share (EPS) have grown an industry-leading average of 34% annually over the past decade.
  • During that time, the average annual return to Jabil shareholders: 39%. Only two companies in the Fortune 500 have done better. (Who said manufacturing is a bad investment?)

What is the secret of Jabil’s success? The article hones in on Jabil’s (“somewhat unique” — whatever that means) business model of autonomous business units aligned with major customers. Each of these 40 or so groups, the article explains, have their own supply chains and P&L’s.
As I wrote on March 29, Flextronics is changing its own model to one aligned with end-products (versus geographies). In this way, it seems, Flex will begin to look more like Jabil, whose operating margins are the envy of the industry. Jabil has been careful in the past not to call itself an ODM, while its Singapore-based competitor has embraced the term. To large degree, however, that’s just a buzzword. At the end of the day, EMS companies’ profits hinge on their ability to manage their supply chains and build at high yields. In that regard, plaudits for Jabil are long overdue.

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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow