Foxconn is said to be stepping up its hiring to meet delivery schedules for Apple’s iPhone 6, but not all of its contract manufacturing businesses are booming. The Taiwanese OEM giant is seeing slow orders at its Chongqing base and attempts to redeploy the excess labor have led to disputes, yet again.
Due to insufficient orders from Hewlett-Packard, Foxconn chose to close some of the portable computer production lines in Chongqing, Yicai.com reported. However, problems arose when it tried to transfer its staff to other factories and terminate some of the employment contracts.
Wang Ming, one of the workers at the Chongqing base, told Yicai.com that Foxconn usually knows the volume of orders about a year in advance. “But it is June now and we don’t have any information about next year’s orders yet,” he said.
Before spending US$3 billion on the factory in 2009, Foxconn got the local government’s word that it would receive a decent amount of orders as the local cadres went to great lengths to build up a portable computer cluster in the city.
But things didn’t quite work out as planned. The notebook market has taken a nasty turn since tablets started to gain popularity in 2010.
Overall demand was falling, but more newcomers were squeezing into the shrinking market. Taiwan original equipment makers such as Inventec, Quanta, ASUS and Acer soon joined the competition. Adding to the woes, HP took some of its orders to Southeast Asia to save on costs.
Being a maker for brand owners, Foxconn has no choice but to maintain flexibility in a rapidly changing electronics gadget market. Frequent clashes with its labor force didn’t help.
The Chongqing event is but one of the challenges that Foxconn faces in its OEM business. It adds to the reasons why Foxconn chief Terry Guo is trying to steer the company towards a higher level of automation, a bigger share of high-end products and more own-brand business.
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