A Case Study on the Impact of the Rising Wages and Worker Shortage in Mainland to Taiwanese Contract Manufacturers
Date Issued
2015
Date
2015
Author(s)
Yin, Hsuan-Po
Abstract
Benefit from the increasing standardization and horizontal specialization in the global electronics industries during the past thirty years, especially in the personal computer related hardware sectors, Taiwan electronics manufacturers have experienced a phenomenon growth and have become a global manufacturing base for the world market. Key to the formation of this manufacturing power is the abundant low cost labors supplied in China during the past twenty years. However, China’s labor costs no longer cheap due to increasing demand and supply shortage. Plus, labor shortage easily occurs after Chinese New Year break. Such cost pressures and operational uncertainty either force companies to relocate manufacturing sites beyond China or induce more companies to find feasible ways to conquer. Responding to this critical challenge, this thesis initiates a systematic analysis and provides useful suggestions especially to Taiwanese contract manufacturing companies in China. Our systematic analyses starts from understanding the demand and supply structure on labors for China production. We then benchmark the evolutionary development of manufacturing industries in Europe, America and Japan and learn their experiences in developing production automation. With these explorations, we conduct a case study on Delta China, a worldwide leading design and manufacturing company in switching power supply products, to learn how they manage labor costs rising and supply shortage issues during the past decade. Our research findings suggest that, although transformation based on value-up and competence upgrading are imperative to long-term competitiveness, strategically managing labor cost rising and supply shortages is a vital part for successful transformation. Delta’s experience suggests the usefulness of expanding the value chain scope for value-added manufacturing services and eventually creating an end-to-end service platform upon which the manufacturing competitiveness can be based. In addition, providing employee career development programs and investing in factory automation can further sustain the competitiveness. Implications of our research explorations are also discussed.
Subjects
Original Equipment Manufacturer
Value Chain
Labor Cost
Automation
Type
thesis
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ntu-104-P01750050-1.pdf
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