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Firm shares tips on running China facilities

Posted: 01 Jan 2007 ?? ?Print Version ?Bookmark and Share

Keywords:connector? Bel Fuse Inc.? David Roman?

Meals and movies might not be at the forefront of electronics executives' minds as they contemplate opening a plant in China. But perhaps they should be. Connector maker Bel Fuse Inc., which performs most of its manufacturing at four facilities comprising about 88,258m2 in mainland China, recently added a new building to its Wing Ming operation. The U.S.-based company's experience offers some lessons, expected and unexpected, for others looking to establish or expand operations in China.

Provide room and board.!Bel Fuse includes housing and cafeteria service as part of the compensation package for 3,500 workers at its upgraded Wing Ming manufacturing facility in Zhongshan. Such services are typical, not unusual, said VP of finance Colin Dunn. "Most of the labor is not indigenous to the area," he explained. "They need to be housed and they need to be fed." Two contractors serve 10,000 meals a day, giving employees a choice of where to dine. The contractors are paid equally by Bel Fuse, and the competition keeps them on their toes, Dunn said.

Make 'em laugh.!The 36,697m2 Wing Ming facility includes a movie theater, exercise room and basketball court for residents to use when they are not manning one of two shifts in the plant's 20hr workday. Workers must request movie tickets in advance to get a seat and avoid overcrowding. Other forms of entertainment and other theaters are nearby, "but most of the workers are trying to save money," so Bel Fuse offers a variety of recreation, Dunn said. The company wants to make a truism of the old adage: The happy worker is a productive worker.

Follow the rules.!In 2006, China's federal government raised minimum wages and overtime rates for workers, and shortened the standard work week from 50hrs to 40hrs. Those moves, as well as a labor shortage early last year, raised Bel Fuse's expenses. "These higher rates and benefits are reflected in the company's cost of goods sold," according to Bel Fuse's latest annual report, but they kept it within the law.

Stay close to the customer.!Bel Fuse sold more than $130 million worth of products into China in fiscal 2005, accounting for about 60 percent of its total sales. Most of the China-built systems incorporating the company's interconnect, circuit-protection, magnetics and module products are exported to other regions. "We wanted to expand in China because that's where most of our customers are manufacturing," Dunn said. "We already had a fairly good footprint there. Just for the economies, it made sense for us to stay."

Stick with hot products.!The nine surface-mount production lines added at Wing Ming have "the capacity to pick and place over 150 million components per month," president Daniel Bernstein said in a statement. The lines can make DC/DC converters and MagJack integrated connectors, higher-end products "that tend to have a little less labor and need more automated equipment," Dunn said. The lines expand capacity at Wing Ming by about 25 percent, Dunn said.

- David Roman
EE Times

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