A Good Person Is Hard To Find

December 31, 1996

Good labour is getting harder and harder to find. Everywhere. Southeast Asia is no exception, and believe it or not, neither is Mainland China. In plant after plant, the global labour crisis facing the injection moulding industry is cited as a major factor inhibiting growth. Generally, moulders have the technology available to them and the capital they need to invest in growth and meet customer demand. What they lack is people. Whether it is in countries with 200 million people or in those with closer to 2 million people, whether it is in countries with a base pay of US$ 40/day or US$ 40/month, the situation is the same. People are the problem.

"We should be moving faster. We should be running, but we're just starting to walk," says Nelson Ngai, general manager of Nypro Shenzhen in the P.R.C. Why? "We don't have enough good people."

"We have a good management team. Most of them come from Hong Kong, as did I. Our challenge is training local people," adds Louis Cheung, Nypro Shenzhens plant manager. "We will have to meet our budget - competitiveness demands that. So we can't overload ourselves with people like myself. We can't pay Hong Kong wages to people doing setups, for instance."

Cheung says moulders in the P.R.C. face a double-edged sword. Training locals, often by sending them for training to customer plants or through its machinery suppliers, means they eventually will deserve and expect higher wages, which could undercut the area's global competitiveness. "The more you train them, the more costly they become."

Nypro Shenzhen pays US$ 40 to 100/month for 72-hour weeks, depending on transportation and housing costs. Most of its workers come from northern China, so the company must provide room and board. Cheung says such unskilled labour in the P.R.C. works very hard, but is generally inefficient. "It usually takes two people to do the job of one. We offer incentives related to good parts production percentages, and that helps somewhat. Folks from northern China work like crazy, but generally they are working to get back home."

One reason is that the company only hires single people, and people from the north generally leave their spouses back home. The company invests heavily into more automation, but finds it difficult to balance training costs with automation costs. "Because of our high inflation and other factors, I think it is only a matter of time before labour costs will catch up to us. Moulding in China has to start with education," Ngai says.

"It is getting tough to find good people." This familiar refrain comes from K.L. Hang, general manager of Luster Industries Sdn. Bhd., RM 100-million-contract manufacturer (US$ 40-million) in Kedah Darulaman, Malaysia.

Hang says one reason why this is the case is that there are so many new factories moving into his part of the world. Luster Industries has no formal training program in place. It usually relies on partnering with its suppliers, letting them provide training.

"Here, technical people are O.K. to find, but machine operators are scarce. We hire people from the area, but travel costs are a problem." His company wants to grow into mouldmaking, but has found Malaysians lack the technical expertise. Luster Industries' solution? Partnering with a mouldmaker offshore. Discussions are under way with mouldmakers in areas like Korea, Japan, and Singapore.

"Costs are increasing in Malaysia. We can improve our productivity, but there is a limit to how far we can go," Hang continues. "Malaysia has about 20 million people, but Indonesia has about 200 million. Our direct labour costs are about RM 400/month (US$ 160), but we rely heavily on foreign workers from Indonesia, Bangladesh, Pakistan, and India. Our population is not big enough to cater to the rate of growth in our industry."

If this is the situation in a country with around 20 million people, imagine what it is like in tiny Singapore, with a population of 2.8 million.

"Manpower and training are the biggest obstacles to our growth," says William Chow, managing director of Singapore's SEB Plastic Pte. Ltd., a high-volume custom moulder of small precision parts that is part of Singapore's S$ 100 million Univac Group (US$ 70 million).

Combined, the Univac Group employs 400 in its seven plants. SEB Plastic has aggressive local expansion plans, particularly into cleanroom medical moulding, and also plans expansion into other areas of Southeast Asia. Again, people are the problem. "It is a problem finding good people, everything from engineers to operators. Local kids these days would rather be lawyers, doctors, and investment bankers."

Sandy Oh, the Univac Groups managing director, has made a commitment to reinvest profits back into in-house training. A mouldmaker by trade, he believes training to be as important as world-class technology, joint-venturing, and anything else to ensure competitiveness in tough markets at home and abroad. "Our company must commit to our people. We send some of our people to colleges in Singapore and overseas as well. And we try to maintain a corporate culture and working environment that will keep the labour turnaround low. I cannot say we do not have a problem, but I feel we have it under control." Both Oh and Chow also praised the efforts of the government of Singapore to invest in expanding its national education programs.

Yet moulders in Singapore agree that labour is and will continue to be a problem. With such a small population, and with other more glamorous career opportunities captivating the local young, most have had to hire foreign workers, mostly from nearby Malaysia, or from the Philippines. But there are government quotas and companies cannot under-employ local workers.

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