Thu, Dec 25, 2008 - Page 12 News List

Chunghwa Picture closes plant

FIRST MOVEThe closure is a first for a local LCD panel maker and indicates that cost-cutting measures may not be enough for local players to weather the economic storm

By Lisa Wang  /  STAFF REPORTER

Chunghwa Picture Tubes Ltd (中華映管), the nation’s third-largest liquid-crystal-display (LCD) panel manufacturer, yesterday said it had halted production at a computer screen plant this month to cut costs.

The move makes Chunghwa Picture the first local LCD panel maker to take the drastic measure of closing a plant in the face of the economic slump, signaling that a slew of recently implemented cost-saving efforts — including unpaid leave, reduced working hours and lower factory utilization — may not be enough to help companies survive tough times.

“To counter the slumping LCD industry, the company is concentrating its manufacturing in certain production lines, aiming to boost competitiveness,” company spokesman James Wu (巫俊毅) said in a filing to the Taiwan Stock Exchange.

Chunghwa Picture said in October that it did not expect seasonal demand in the fourth quarter as shrinking consumer spending caused an excessive inventory pileup.

“Also, we need to make some changes to the workforce structure to maximize overall productivity efficiency,” Wu said. “We hope the cost-saving efforts of [streamlining] human resources and [reducing] overhead expenses [by closing the plant] will help us enhance our competitiveness for a future rebound.”

The shutdown affected about 700 employees who originally worked at the 4.5-generation plant in Longtan (龍潭), Taoyuan County, Chunghwa Picture said.

No layoffs will occur as the staff will share shifts with workers at the company’s two other plants starting next month, but there will be a payroll cut because of fewer working hours, the company said.

“The plant closure will not greatly help to ease the current severe oversupply and the factory usage is already low. The real problem now is sagging demand,” David Hsieh (謝勤益), a vice president of market researcher DisplaySearch, said by telephone yesterday.

The nation’s two largest LCD panel makers AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) have implemented unpaid leave and tried to eliminate contract workers to cope with equipment loading that has fallen to around 60 percent this quarter in expectation of a shipment decline of at least 30 percent quarter-on-quarter.

AU Optronics and Chi Mei had 80 percent factory utilization in the third quarter.

Shares of Chunghwa Picture fell 3.76 percent to end at NT$3.07 yesterday. The stock prices of AU Optronics and Chi Mei shares jumped by 1.38 percent and 0.99 percent to NT$22.1 and NT$10.25, respectively, better than the benchmark TAIEX index, which inched up 0.39 percent.

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