Notebook orders robbed of Foxconn Chongqing plant "Earthquake"

Although it has become known that it has to expand to the "foundry" landscape, Foxconn's foundry ceiling seems to have come earlier than expected.

Recently, there have been reports of a labor dispute involving more than 800 workers in the factory in Chongqing, Foxconn. The main reason for the incident is that because of the gradual reduction of HP notebook orders by Foxconn, the factory has made a decision to adjust the production line, but there is no proper solution to the problem of triage and cancellation of employees, so many employees hope to talk with the manufacturers.

In its response to the first financial daily, Foxconn said the incident was a result of a redistribution of internal manpower and that the two sides had reached a consensus and that the following personnel arrangements had been completed. Foxconn stressed that the operation of the plant is normal.

Earlier, other parts of Foxconn have also been shut down for similar reasons. Last May, Foxconn's Group of science and technology Shenzhen factories were shut down, at least 3000~4000 people were affected by "diversion".

Wang Ming, a Chongqing factory employee, told reporters shutdown is only this time because of the problem of resolving a conflict, but the adjustment of the Chongqing factory is actually starting last year, especially the HP production line orders, was more serious, the adjustment of some direct cancellation of a career group (team).

Chongqing plant "Earthquake"

"In fact, Foxconn will know next year's orders in accordance with its previous mode of operation, but this June, there is no news for next year's orders on my side," he said. Wang Ming told reporters.

He told reporters that since last year, the factory in Chongqing, Foxconn began to adjust, such as the transfer of some of the assets to other departments, and some of the original cost-effective production lines are directly cut off, or directly to the poor performance of the business group to remove, inject new blood. He said that the original notebook computer production line workers can also choose to do the LCD panel or surface frame.

According to its introduction, at the peak, the number of Chongqing plant reached sixty thousand or seventy thousand, but now the number has declined.

Due to the slow growth in the notebook market in recent years, as well as Hon Hai's business expansion, the proportion of notebook products continued to decline, as early as a few months ago, the outside of the Foxconn Chongqing factory HP production line closed news.

"The complete shutdown is not likely, just some of the production line adjustment." Wang Ming told reporters that the main reason is that the environment is not good, Foxconn is also seeking its own transformation, on the other hand, from other Taiwanese manufacturers such as the British industry Tatsu and Tatsu competition.

The Foxconn Chongqing base, located in Chongqing's West Wing Microelectronics Industrial Park, is an important investment that Foxconn hopes to cut into the field of notebook manufacturing in 2009. At that time, the Chongqing municipal government and Hewlett-Packard, Foxconn Technology Group signed a major project settled agreement. The two major projects are "Hewlett-Packard (Chongqing) notebook computer export manufacturing base", "Foxconn (Chongqing) Industrial base", in the outside world it is actually a combination of upstream and downstream projects, the total investment of 3 billion U.S. dollars, covers an area of 10 square kilometers, by Foxconn to undertake HP's orders for OEM, Production of laptops for the global market outside China.

Subsequently, including Asus, Acer, and the other two OEM manufacturers, the British industry Tatsu, Quanta also began to enter the notebook industry as a part of the package. In the three quarter of 2011 years ago, Chongqing actually used Taiwanese capital to reach 819 million dollars, which is the sum of the actual use of Taiwanese capital from 1998 to 2007.

Chongqing also set a 2015 years ago to the local notebook computer capacity to do 80 million, accounting for the next 3 years, the world's new 160 million laptop computer target.

But the market has changed. Notebook computer market from the second half of 2010, in addition to the stagnation of market growth, but also the phenomenon of shrinking, is tantamount to squeezing Foxconn in the notebook industry development space.

"Foxconn did not feel strongly about the impact and impact of the reduction in notebook business because of Apple's orders," he said. Taiwan industry analysts told reporters, but since 2012, Foxconn has seen as a foundry faced the ceiling, made a large-scale restructuring of the group, homeopathy to reduce the share of the notebook business, reduce the related plant capacity, but also become imperative work.

Expansion of the brakes

As a matter of fact, Foxconn's investment in the mainland is not to be underestimated. Prior to entering Chongqing, the local government provided the conditions for a few years to achieve "the need for a complete machine parts 80% localization, so that parts and components transport almost no logistics costs, leaving 20% very few strategic goods in the world configuration." "Three years later, if the promise is not honoured, all the logistics costs arising therefrom are subsidized by the government."

A local private enterprise responsible for Foxconn in Chongqing has been reluctant to co-operate with Foxconn because of its high cost of investment. At that time, the enterprise obtained 700,000 yuan of private special subsidy funds, and in a short period of 20 days to obtain the local bank 20 million of the credit funds.

Such generous treatment has allowed Foxconn to complete its initial layout in a very short period of time. In Chongqing, Foxconn's planning in addition to notebook production base, there are a number of other related 0 components, magnesium alloy materials, intelligent monitoring software development, LED lighting and other projects. In 2012, Hon Hai and Hewlett-Packard again joined hands to set up a production base for printers in Chongqing.

But sometimes the industry's rapid change may surprise everybody.

Before entering Chongqing, Foxconn received the "promise" is: Hewlett-Packard made 40 million notebooks to Chongqing, if Foxconn to Chongqing, will be able to obtain the share of L500 million, not only to do the whole machine, but also to do parts, conditions are necessary to bring parts manufacturers, parts base to move over. Mr Gou's appetite was immediately lifted, and more than 10 department directors and four vice presidents were immediately called in to join the talks. Originally only half an hour of the meeting, the last was extended to 3.5 hours, the cooperation intention is basically finalized.

But HP has not been a good partner with Foxconn. In addition to the overall decline in the industry, Hewlett-Packard in the past few years also in the domestic capacity of the transfer, one is closer to the market of Japan and the United States, the second is cheaper Southeast Asia, the purpose is to shorten the delivery time to customers.

"In fact, Foxconn is aware of this, and with the needs of the transition, the shape of the Foxconn Park is not quite the same as it used to be." "The Taiwan analyst said that although the production line of the notebook-related plant has been adjusted, other projects in the Chongqing plant are still in accordance with their respective planning and development." And it is not the first time that Foxconn has adjusted its production capacity.

At present, Foxconn in the Pearl River Delta, Yangtze River Delta, the Bohai Sea, central and western regions have layout.

Among them, Foxconn's mainland stronghold, Shenzhen, will build a "five-center base" focusing on technology development and E-commerce. The Yangtze River Delta region has formed a precision connector, wireless communication components, liquid crystal display, CNC equipment, machinery parts, semiconductor equipment and software technology development and other industrial chain and supply chain polymerization system. The Bohai Rim area takes the wireless communication, the consumer electron, the cloud computing, the nanotechnology and so on as the backbone industry. Smartphones, tablets, auto parts, precision molds and other businesses have shifted to the Midwest.

It is understood that in order to better meet production needs, Foxconn in the past two years often used the "diversion" approach, that is, the internal will be based on the production line of various groups of orders to the extent that the surplus manpower to adjust to the demand for strong orders, manpower shortage of the cause group production lines to effectively improve the efficiency of management, but also caused by many contradictions

The analysts believe that Foxconn in order to quickly meet customer production needs and their own cost considerations, production line flexibility adjustment and mobility is unavoidable, but for grass-roots staff, how to effectively divert, reduce the chance of conflict may also be the future management needs to consider the focus.