Analysis: Intel to leave RP in 2010?

April 9, 2008 by rdagumampan

Philippine Daily Inquirer website reported that Intel Technology Philippines plans to ramps down their 10-year old assembly and test facility network in Cavite. One of the most admired companies in PH where employees received computers free in x yrs of service, high salary, shuttle service in as far as Manila, health care et. al. But these will not be for long as this statement conveys:

“In an effort to keep employees informed, Intel has updated its employees that significant investments would be required to ensure the long-term viability of its factory building in Cavite” Intel replied on press inquiry.
The Electronics Industry

The electronics industry is just like a roller coaster. It goes to the peak very fast, but make a high head first fall when the consumer demand is low. Thus, most employees were hired on a contractual basis. Fujitsu, Samsung, and Epson is not immune to this fluctuations, there were many times they have to declare no work or reduce work hours of employees to stay competitive. The case of intel, IMHO, its not purely high cost of labor, corporate taxes, or facility problems. These all can be resolved thru negotiations. Its the consumer demand for new Intel Chips that forced Intel to change strategy to stay competitive. The peso appreciated sharply in the past 5 years thus reducing Intel’s spending power.

In Germany, last year several companies including Nokia closed down their plant and offices and move the facility into other locations where labor and cost of doing business are low. Shell also plans to ramps down its software development division and departments in favor of outsourcing the tasks into other countries including the Philippines.

Facing Domino Impact

While we are concern with Intel employees, other smaller and weaker companies that supplies parts to Intel also has to face the impact. Not everyone knows, in a technology park, there are companies dedicated to just manufacturing chip boards, little fuses, silicon wires, packaging, thermal instruments. Companies exclusively working with Intel on recruitment process, training services, food concessionaire, shipping and handling, and shuttle services.

People working on these companies will most likely to suffer the pain of losing their jobs, shutting down their companies, retrench employees, declare a no-work weekdays. Intel is an American firm and there is always been good separation packages on all regular employees when US firm big chip firms shuts down. But smaller companies, like I mention cannot give the same.

I almost forgot these small Intel cyber schools that we visited when I was in Manila.

Technology Transfer

I believe that there is knowledge transfer but technology transfer is not guaranteed. We, Filipino workers learned the process automation and experienced the manufacturing assemblies from these Multi-National Companies (MNC) and expats. The technology in the process is still just their technology, their own patented technology. We may learn how to assemble cars, but we don’t know how to build those machines and PLCs that assemble cars. We may learn how to produce cola and soda, but they came here in syrup. We may learned how use robotics, but we’re not trained to build those robots. We simply became technicians, operators, and supervisors.

World Free Trade

We should not complain a lot on this sad event. It is a reality that every WTO-member country have to face. If not for now, it will surely be in the near future. Globalization is the term the best describes these changes that no one country is immune. Others will win, several will lose the game.

The responsibility is ours, the initiative to innovate in our hands, the creativity to invent in our mind. The opportunity is here, lets not waste it.

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