Compal joins in relocation drive to reduce costs

Compal Electronics Inc (仁寶), the world's second-largest laptop computer maker, plans to relocate up to 400 employees to the company's affiliates within Taiwan beginning late this month in order to cut production costs, the company said yesterday.

"To expand our capacity and meet clients' need [for faster delivery] ? the migration of production bases is inevitable," Compal spokesman Gary Lu (呂清雄) said.

Compal, which has more than 4,000 employees in Taiwan, wants to transfer about one-tenth of these employees to the company's affiliates, including International Semiconductor Technology Ltd (飛信), which packages and tests integrated chips, and flat-panel maker Toppoly Optoelectronics Corp (統寶), Lu said.

People who don't wish to be transferred could receive preferential packages for offering their resignation, or early retirement packages, including stock and cash bonuses that would be awarded on the basis of employee seniority, Lu said.

Compal is not the only company of its type with plans to relocate jobs. The world's largest laptop maker, Quanta Computer Inc (廣達), which reportedly has invested more than NT$2.2 billion (US$65.6 million) in plants in Shanghai's Sungjiang, said Monday that it plans to relocate about 1,500 employees, around 30 percent of its workforce, to subsidiaries or plants overseas.

Quanta's employees would be relocated to affiliated companies such as Quanta Display Inc (廣輝電子) and Quanta Storage Inc (廣明), or to the company's plants in Europe, China and the US. Quanta said that those who do not wish to be transferred would be offered early retirement

In a bid to cut production costs and help sharpen clients' time-to-market capabilities, the nation's notebook makers have been moving manufacturing bases to other countries, which has brought hardship on local workers.

Compal has established two factories in Kuanshan, Jiangsu Province, where as much as 80 percent of the company's total output is manufactured. The company's third plant there is scheduled to start production in the third quarter, which could bring to 90 percent the portion of the company's manufacturing that is done in China.

Taiwanese information technology [IT] companies' manufacturing bases in China were responsible for 63.3 percent of US$56.7 billion worth of Taiwanese IT hardware production last year, up from 47.5 percent of the US$48.4 billion output value in 2002, according to figures from the Market Intelligence Center (市場情報中心).

The notebook computer sector, for example, saw 74 percent of its production carried out in China in the first quarter of this year, up from 66 percent last year.

Smaller notebook maker First International Computer Inc (大眾電腦), which has moved most laptop production to factories in Suzhou, Shenzhen and Wujiang, carried out a wave of personnel re-structuring last year, according to the company's spokesman, Chan Chao-ching (詹朝慶).

The company does not have any restructuring plans for the time being, Chan said, but may not rule out further adjustments in the second half of this year.

Wistron Corp (緯創) said that it has moved most production of mature products, like notebooks, to China, but currently has no relocation plans for its 3,600 employees in Taiwan.