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August 2002

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Subject:
From:
Jane Koh <[log in to unmask]>
Reply To:
Date:
Wed, 7 Aug 2002 11:45:25 +0800
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Folks,

You only worry about ethics when you can be sure that your survival won't
be threatened by those seeming ethical people out there.  1st world
countries have been there done that; 3rd world countries are still in the
wild wild west.  Greed is a universal human nature.  In the 1st world,
people do it in a bigger way, but mask it well.  Look at Arthur Andersen,
and Tyco, and Worldcom....

Simple answer to Roland's question: the cost of PCB is not the same because
of all the reasons he mentioned.  One thing you have to bare in mind - the
cost is different because the cost structure is different.  Cost structure
is different mainly because labor cost is different.  Labor cost is
different because perspectives are different.  Those who can make use of
the arbitrage are the winners.

Buckle up for the long answers:

Infrastructures make a whole lot of difference.  3rd world countries have
lesser infrastructures, or rather, in many cases, infrastructure
development is concentrated in pockets of area such as the capital cities,
industry zones etc, to develop some industries and to attract foreign
capital.  In some countries, when prospects are good, companies build the
infrastructures they need - I am talking about housing, roads, power
generation & distribution, port facilities, railroad system, airports, etc.
 Lesser infrastructure thus may or may not affect your product delivery;
however, lesser infrastructure could be a result of smaller taxation that
you or your suppliers need to pay.

Social security, medical cares, living conditions:  When I was in the US, I
have never heard 'social responsibilities' mentioned by employers.
 Responsibilities to the shareholders, yes (except when some you-know-who
companies interpret it differently), responsibilities to the employees and
the general public, no.  In 3rd world countries, 'social responsibilities'
is a common concept among most of the sizable employers.  Legislation is
often not enough to ensure comfortable retirement of workers, or 'social
security' in the American sense; nor does it necessarily mandate adequate
medical cares or living conditions for the families.  However, in the
companies that I have worked for in Malaysia, additional private medical
cares are provided by the companies on top of what the government offers
(of course, our national healthcare system is not as good as the NHS in
Britain).  Besides, I get tax exempt petrol allowance and housing
allowance, 2-month maternity leave, even additional pension fund on top of
the legally required employer matching 'employee providence fund'; our
factory workers get food allowance, company housing, company shuttle
service... Now, do you call this social responsibilities or ethics in the
1st world countries?  Oh I forgot, it has been almost 1 year since I lived
in US - you call it 'benefits' or 'incentives', otherwise people won't come
to work with you, so your labor cost becomes expensive, and you outsource
to 3rd world countries!

Actually, 3rd world countries welcome your business.  It's a win-win
situation - you get your cost down, we (the employers and the employees)
get a slice of your cake.  To be fair, in Malaysia, we outsource to China,
and we import foreign workers from Indonesia, Bangladesh, Philippines, etc.
 Again, it's a win-win situation.  Even though as a contract manufacturers,
we hate the Chinese for competition, just like you 1st world manufacturers
don't like the 3rd world players for the same reason.  It is a 'win' for
the 3rd world's employees because they get jobs, get paid, improve the
living conditions of the families, and plant a better future for the next
generation.

Let me give you an example: a semiconductor factory worker in Bandung (one
of the largest cities in Indonesia, population 16 million) get USD60 per
month, including benefits.  Out of this amount of money, he/she may need to
pay for housing, transportation, food, etc.  If he/she comes to Malaysia to
work, he/she gets USD250 including benefits.  In terms of human rights,
well, they are separated from their families (most of them don't see their
families for 2 to 3 years), working hour is long (12 hours average, in
order to get 4 hours overtime pay), allocated housing is below our comfort
level, no promotion prospect, workplace rules and regulations are
stringent.  But you know what, after 4 or 5 years, some of them can fully
pay for their family homes back in Indonesia.  Can your factory workers
with fully respected human rights do that in the 1st world?

It is all back to differences in cost structure and perspective.  USD250
per month is low cost for Malaysia, negligible petty expense in the US and
Europe, but 'big money' for these foreign workers.  So they are willing to
work under less-than-optimal conditions (or what you may consider ill
respect of human rights, and they consider OK conditions) for the benefit
of their own or their families' future.  In fact, Malaysia has just offered
amnesty for illegal immigrants, and around 40,000 illegal foreign workers
took up the offer!  (By the way, Statsym only employs legal foreign
workers.)

Pollution and ISO14000: that gets a bit interesting.  Environmental
legislation is weak in the 3rd world.  Most companies, regardless of 1st
world or 3rd world, comply only to the letters of the legislation and not
more.  Some governments are pushing the limits and do not impose
environmental requirements that are too stringent because the additional
capex and opex may kill businesses.  And no business = no job for people,
no job for people = no development, no development = 3rd world country.  I
am not trying to fend for the poor environmental consciousness of 3rd world
countries. I think there is a lot of work to be done.  But pulling your
business or investment out of 3rd world countries is not going to solve the
problem.

Guidelines of good practice: it's all too subjective.  It is about your
human principles, your company's mission, etc.  I don't think IPC
can/should establish something like that.

Thank you for reading my long thesis (gee, I can submit it for a master
degree in social science!)

By the way, my company is looking for business partners and strategic
allies with small to mid size companies in the US.  We are planning a road
show sometimes in October.  If anybody is interested to hear us up, please
contact me offline.

Have a good day.

Regards,
Jane Koh
Director of Technology
Statsym Berhad

Tel: +60 (3) 7876-9433 ext. 886
Fax: +60 (3) 7875-8431
Email: [log in to unmask]
Add: Lot 11A, Jalan SS8/2, Sg. Way FIZ,
        47300 Petaling Jaya, Selangor, Malaysia

-----Original Message-----
From:   Jim Kittel [SMTP:[log in to unmask]]
Sent:   Tuesday, August 06, 2002 21:27
To:     [log in to unmask]
Subject:        Re: [TN] Competition - Cost & Price

 << File: ATT00004.htm >> Beautiful prose, that should be published!
Jim

-----Original Message-----
From: Ken Carlile [mailto:[log in to unmask]]
Sent: Tuesday, August 06, 2002 7:01 AM
To: [log in to unmask]
Subject: Re: [TN] Competition - Cost & Price


Ethics?  What are those?  What third world country makes ethics?  As
witnessed by the nightly news, there are a few CEO's that would buy ethics!
That is if the price was right.  Well, not actually right, but cheap.
 Yeah,
the cheaper the better.  Heck, once a companies stockholders saw that there
CEO was buying ethics, then there would be a run on the stock, because that
is a fine company!  Are you kidding me?  Company size and buying power
derive cost.  Employee education and quality, as well as location derives
labor.  Greed is the final hidden cost!

We are not the hypocrites!  That is unless you are put into a position to
make the decisions!

-----Original Message-----
From: TechNet [mailto:[log in to unmask]]On Behalf Of Roland Jaquet
Sent: Monday, August 05, 2002 5:17 AM
To: [log in to unmask]
Subject: [TN] Competition - Cost & Price



Dear Technetters,

I would appreciate your comments on the following statement:

"The cost of PCBs is the same everywhere on earth, the difference is in the
Price"

If you agree with the above, then what are the differences ?

- Infrastructures?
- Social security ?
- Respect of human rights ?
- Pollution ?
- Slavery ?
- Medical cares ?
- Living conditions ?
- ISO 14000
- ...

Suggestions anyone ?

I remember a time where German use to say - we do not want to buy unless we
have proof that manufacturers are respecting good ecological practices..
Have a green label - concerns about children slavery - etc.. Where are
those
today?

Should IPC / EIPC care about establishing a basic guideline / approbation
of
good practice to those who are respecting the above points ?

Are we hypocrites and forgot about ethic ?

Very Best Regards - Roland

www.PCBspecialist.com <http://www.PCBspecialist.com>

Please visit our Website and FREE register in the World largest PCB
Manufacturers Database

Roland Jaquet - PCBspecialist - 14 ch. de Vers - CH-1228 Plan-Les-Ouates -
Geneva - Switzerland - T +41-22-880-0405 - F +41-22-880-0409 - GSM
+41-79-203-3723 - Company & Technical Viability - Yield Improvement -
Company Strategy & Acquizition - Equipement &  Technology Choice - EIPC
Member
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