VERNON HILLS, IL -- Zebra Technologies will outsource 90% of its printer production to Jabil, up from 59%, the company said last week. In doing so, the firm will dismantle its US manufacturing operations over the next two quarters, executives said on a conference call with analysts. Zebra said its supply chain moves would add 2.5 to 3 percentage points in gross margin improvement in fiscal 2010.

"In our first quarter call, we discussed as we had moved 59% of our printer production to Jabil. As of today, that number has increased to 90%,"CFO Michael Smiley said.

Zebra expects to save $20 million or more once the US-based manufacturing is shut down.

"Over the next two quarters we will be ramping down our US manufacturing infrastructure before the full financial benefits of the project are realized," Smiley said.

Zebra did not specify the value of the printer programs being moved to Jabil, but CIRCUITS ASSEMBLY estimates the outsourced programs are worth more than $600 million.

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