Cherokee Completes Sale of Manufacturing Facility in Mexico – Production of Power Supplies Moves to China

May 31, 2007 by Jeff Shepard

Cherokee International Corp. announced that it has completed the sale of its manufacturing facility in Guadalajara, Mexico, to Inmobiliaria Hondarribia, S.A., for approximately $1,250,000. The sale includes some assets and equipment currently located at the facility.

In February 2006, Cherokee International opened a new, 120,000 square foot, state-of-the-art facility in Shanghai, China with plans to move and consolidate high volume, low mix manufacturing to Shanghai from its plants that represent a higher cost basis to operate. The closure of the facility in Mexico is part of the consolidation plan. The design and location of Cherokee’s new facility in Shanghai optimizes the company’s point of consumption and supply chain location in Asia. An increasing number of Cherokee’s customers and suppliers currently have their own manufacturing operations in China. Because its Shanghai operation positions the company to take advantage of the overall business growth in Asia, Cherokee believes China could also become a significant consumer of its power supplies.

Lin Fox, Cherokee’s Chief Financial Officer, stated, "We continue to implement our strategic plan to consolidate manufacturing and improve margins. While we closed out production in Mexico, we were successful in retaining all business and customers from this location. We should begin to see considerable cost reductions and faster product delivery times, especially to our customers that have manufacturing facilities in China."