Hon Hai Precision sets up operations committee

By Natasha Li  /  Staff reporter

Wed, Jun 12, 2019 - Page 1

Hon Hai Precision Industry Co (鴻海精密) yesterday established an operations committee to take charge of its daily operations, amid rising concern over the company’s fate as chairman Terry Gou (郭台銘) ventures into politics.

The nine-member committee is to meet once a week and present its decisions directly to Hon Hai’s board of directors for approval, making it the second most important decisionmaking unit of the company, Young Liu (劉揚偉), a nominee for board director, said at the company’s first-ever investors’ conference.

Any proposal made by a committee member needs to gain approval from at least two-thirds of the committee before being submitted to the board for approval, he said.

Other committee members include financial director Huang De-cai (黃德財), and three board nominees — Lu Fang-ming (呂芳銘), Li Jie (李傑) and Lu Sung-ching (盧松青).

Hon Hai vice president and group chief financial officer Huang Chiu-lien (黃秋蓮), Sharp Corp board director candidate Lin Chung-cheng (林忠正), Hon Hai digital product sub-group chief Chiang Chih-hsiung (姜志雄) and China iPhone business head Lin Cheng-hui (林政輝) round out the list.

The board nominees sought to reassure investors as the company’s stock has plummeted more than 20 percent amid concerns over Gou’s imminent departure after he joined the Chinese Nationalist Party’s (KMT) presidential primary.

Faced with an escalating US-China trade dispute, Liu said the current market is volatile, and US President Donald Trump’s administration’s unpredictability is adding to the uncertainty.

With production sites in 16 countries, Hon Hai has not taken a big hit from the dispute as it is able to reallocate orders, Liu said, citing last month’s record-setting revenue of NT$384.22 billion (US$12.22 billion) as proof.

“About 25 percent of overall production comes from other countries besides China,” Liu said, adding that the company has the ability to rapidly increase production in those countries depending on the demand of clients, such as Apple Inc.

Hon Hai is able to predict and adapt to a fast-changing environment, such as its decision to invest in Wisconsin before the US-China trade dispute broke out, he said.

“We have also built a production site in Chengdu [China] to make iPads within 90 days,” he added.

Hon Hai is now focused on deploying technologies, such as industrial Internet of Things (IoT), across its plants to digitally transform the firm and improve profitability, Li said.

“We will use AI [artificial intelligence], big data, cloud and domain knowledge,” Li said.

The company’s sheer scale represents a micro cosmos, allowing it to build up a system that deploys cutting-edge technologies, he said.

Asked about the company’s plan to raise employee pay by 7 percent and cost concerns, Huang said that it is an incentive to attract talent and the company cannot afford to reduce investment in research and development in order to stay globally competitive.

The company said that it would hold an investors’ conference every six months.

It is scheduled to hold its annual shareholders’ meeting on Friday next week to approve new board members, among other things.