Updated: No ‘Get Out of Jail Free’ Card for this U.S. plastics executive in China
Published: June 26th, 2013
If you're looking for another reason not to manufacture in China, how about this one: Chinese workers at a plastics manufacturing plant in Beijing have been keeping an American executive confined to his office in the plant for five days, according to numerous media reports.
The workers went rogue after 30 of their cohorts were laid off and given severance packages. The 100 workers still at the plant, which makes medical disposables, are demanding two months back pay, and the same severance package as the 30 laid off workers in spite of the fact that they'd not been laid off, according to various news reports [our John Clark addressed the implications of what the strange case could mean in the context of global labor rates].
The American executive, Chip Starnes, who works for Coral Springs, Florida-based Specialty Medical Supplies, has denied that the company owes the workers any back wages, and that "the demands followed rumors that the entire plant was being closed, despite Starnes' assertion that the company doesn't plan to fire the others," according to a report in Manufacturing.net.
Well, I suppose it could be a language-barrier problem.
Specialty Medical Supplies makes alcohol prep pads, insulin syringes, blood glucose monitors, lancets and other disposable medical products. According to one report, Starnes did say that the company was in the process of gradually winding down its plastics division in preparation for moving that division to Mumbai, India.
Things seem to be getting a bit dicey in China. With the rising wages some companies are looking around Southeast Asia for another low-cost country to move their manufacturing to.
It's a recurring issue.
We saw it here in North America back in the 1990s when OEMs began moving their production to Mexico. Molders for those OEMs then followed and set up facilities only to see those same OEM customers head off for China, Singapore and other Asian countries where labor was cheaper.
Now, China seems to be experiencing the same thing.
I'm sure that Specialty Medical Supplies could find custom molders in Florida—I can name them a few offhand—that can produce the company's plastic products, and do it cost effectively, given the shipping costs (assuming that they produce these products for the U.S. market). Of all the reasons I've heard why not to manufacture in China, this appears to be the best so far.
Editor's Note: Chip Starnes has been freed by his workers, according to various media reports, after reaching a resolution to end the 6-day standoff. According to USA Today, citing a report in the Beijing News: "A deal was reached by early Thursday morning, when 97 workers received two months' salary and compensation that together totaled almost $300,000."
Executive imprisoned by employees freed after cutting a deal
The U.S. executive who was imprisoned in his office by employees fearing the company was closing down without providing severance pay, has been freed. I've since learned that Chip Starnes is the co-owner of Coral Springs, FL-based Specialty Medical Supplies. He was in China to close down the plastics division of the company's China manufacturing plant.
Starnes told the AP that he was able to secure his release by agreeing to pay severance packages to the other 80 employees who were not being affected by the plastics division's closure and move to Mumbai, India. Basically, Specialty Medical Supplies was extorted by workers fearful of losing their jobs by companies moving plants overseas to low-labor cost countries.
With so many companies in the United States closing plants here and moving jobs offshore to low-cost labor countries like China, I think many workers in the U.S. can relate to that fear. Let's just hope the U.S. workers don't get any ideas about hostage-taking in the executive offices.—Clare Goldsberry