GEORGE TOWN: US-based multinational companies (MNCs) in Penang are adopting various cost-cutting measures as they brace for the anticipated impact from the global meltdown.
Federation of Malaysian Manufacturers northern branch chairman Datuk O.K. Lee said several factories have shortened their working days from five to four days.
“Some have frozen employment while others have shut down operations for Christmas and New Year,” he said, adding that a few companies are quietly offering a voluntary separation scheme.
A check revealed that at least two electronic giants here – Agilent Technologies and Jabil Circuit – will shut down their factories in Bayan Lepas for Christmas and New Year.
Employees have been asked to take their annual leave for about a week because of a drop in product demand.
“The global directive is a two-week shutdown but individual plants need not follow strictly. I think precautionary measures like these should be able to help cushion the impact,” said an executive of one of the affected factories.
“Most of my colleagues are happy to go on a break first before we ponder over the future,” she said, adding that the last time the multinational company had a year-end shutdown was during the last economic slowdown.
A Jabil employee said the company’s shutdown would take place from Dec 24-30.
“Usually, our Christmas break is one or two days only.”
An ASE spokesman said the company was shutting down for four days in November and December while a Fairchild Semiconductor employee said the factory would be closed from Nov 21-24.
Between 35% and 50% of the MNCs here have their headquarters in the United States and over 60% of the products made are US-bound, according to an industry insider.
“We are experiencing low export demand. Some MNCs are taking the opportunity to conduct their usual attrition exercise,” he said, noting that the first and second quarters of next year is expected to be “very soft”.
Commenting on the impact of the global credit crunch on the country’s technological sector, US ambassador to Malaysia James Keith said it was “very difficult to predict”.
“The global picture is dark. Even for the United States, we cannot make a prediction (of what’s going to happen). Obviously with slower global flows, bilateral trade will also fall.
“Every company is under pressure to reduce costs. We all have to tighten our belts. The United States has not seen such a situation in a quarter of a century.
“Companies would rather look at measures to reduce cost than lay off employees so hopefully the Federal Government can help us,” he said, adding that the United States was committed to ensuring a “sense of confidence” in Malaysia.
“But there must be give and take in bilateral trade. That is why we hope to conclude the final rounds of negotiations over the Free Trade Agreement soon.”
“US companies are always looking to reduce cost. No doubt this year, Malaysia has been getting many contracts but the future will depend on the decisions made today,” he said, adding that every country has to continuously re-evaluate itself to attract investors.
He was speaking at a press conference after the American Malaysian Chamber of Commerce Penang annual summit with Chief Minister Lim Guan Eng yesterday.
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