PCB Manufacturer, Dynamic Electronics, Laying Off Hundreds
News reports from Taiwan (here, here and here) are reporting on a huge layoff at Dynamic Electronics, based in Taoyuan Taiwan. Dynamic announced that it is going to layoff the majority of its manufacturing staff at it’s Taiwan fab. Of the 490 staff members located in the Taoyuan facility somewhere around 400 to 420 are going to be given their pink slips on October 15th.
According the corporate website, Dynamic ranked 15th in Taiwan for PCB manufacturing capability, 42nd in the world, and 13th in automotive PCB fabrication in 2018. That represents slightly more than $430MM in revenue, with 7,000 employees, so they’re not a small organization by any stretch. Cutting 420 staff members represents about 17% of their overall workforce. It’s also interesting to note, with foreign workers such a hot topic around the globe these days, that a substantial portion of the layoffs will be Thai nationals, for whom the Taoyuan Department of Labor will arrange for transfer to other companies, or a return to Thailand with severance pay. According to Focus Taiwan, “migrant workers remain in high demand in the [PCB Manufacturers] industry.” Of that revenue noted above, the Taiwan fab accounted for around $14MM in loses over the past three years.
If we fall, we’ll just have to get back up and we would persist to make things even more exciting!
Jack Huang, Chairman and CEO of Dynamic Electronics
In addition to offloading staff, Dynamic is going to sell off their Taiwan based manufacturing assets at an auction on October 18th. The reason for the house cleaning seems to be a lack of efficiency and profitability at that particular corporate location, contributing only 10% to the companies revenues, but failing to reach economies of scale. The $12MM they are going to get from the asset liquidation probably won’t hurt either. The result is a corporate shift to increase manufacturing capacity at the Dynamic Jiangsu and Hubei plants in mainland China and keep a portion of the physical location in Taiwan for research and development.
Street View of Dynamic Electronics
What is to blame for the poor revenue, lack of growth, efficiency and profitability at the 13th largest automotive PCB fab on earth? A “global economy turned weak this year due to the impact of the US-China trade war.” Orders booked from the United States only accounted for 2% of the sales for the Taiwan branch, according to Focus Taiwan, but the tariff inspired trade tension caused a significant 10-20% drop in those orders. Two percent of $430MM is $8.6MM, so a 10-20% hit against that (or any revenue stream for that matter) is big.
Having worked for quite a number of companies as a full time employee over the years, I’ve been on both sides of lay offs several times. None of this happens in a vacuum and corporations, particularly of the half-a-billion-dollars-in-revenue variety, plan these things well in advance, particularly when you’re talking about cutting off a chunk of your manufacturing capacity. Orders have to be transferred, raw materials transported, etc. I point this out because Dynamic knew this was coming prior to their announcement on August 26th, including a Labor Department representative being sent to the offices in Taiwan on August 19th for “a better understanding of the move“.
August 19th being the same day that Dynamic announced “Mid-Autumn Festival gift for the employees joining health and public welfare together” featuring the joyous festival clipart adorning the top of this article. So you, kind employee, may choose between a “daily commodity gift box from HueiShiang Organic Life Farm, so that our staff can enjoy the healthy and safe food” or a “handmade biscuit gift box from Kind Garden Organization”, but not a paycheck.
Happy Moon Festiva, Dynamic, Happy Moon Festiva.
