Reverse Outsourcing

Did you notice the lack of attendees at APEX this year? For an editor, this gives us lots of time to interview, conduct panels, talk to leaders in the industry, and grant awards for innovative new products and services. For those involved in shipping large pieces of equipment and flying sales staff to Las Vegas, the experience takes on a whole new atmosphere. Although crowds were thin on the show floor (Denny McGuirk, president of IPC, estimated 20% to 25% down in registrations), those seeking an education filled up the technical sessions. Education makes employees more valuable to any company.

No one doubts that business in the U.S. has limped through a weak period. And in electronics, recent news revealed IBM’s Project Match, which offers laid-off U.S. and Canadian workers the chance to apply for jobs at the company located in India and other areas of low-cost labor around the globe. IBM would help with visas and moving costs, but the salaries would be the same as those within these low-wage areas.

Who would jump at moving somewhere else globally to earn less? Most of us drag our feet at moving between States for increased income. Let’s face it, this is a flat year globally for most EMS providers and OEMs already. Most industry analysts project negative growth, if any. And survival can spur life changes; that is certain.

Employees working at IBM in the U.S. must have known about the Wall Street Journal’s story last month announcing that IBM planned to lay off 5,000 U.S. employees with many of the jobs being transferred to India. Foreign workers account for 71% of IBM’s nearly 400,000 employees at present, WSJ said.

If it’s a global economic change, then we already know about that. The question is, are we improving the lives of individuals by taking them away from their families and homes only to pay them a lower wage? What would be the difference if foreign workers came to places where wages were higher, but families were distant? The problem with outsourcing employees is that all good business decisions are often poor choices for people. As people, do we raise the middle class if we lower incomes? Do we strengthen families by separating them?

As I write this, an invitation to teach English as a second language in a distant country sits on my desk. It doesn't pay well, but it may be an adventure...

The Big Guys: Intel, Freescale and everyone else

It has been a busy couple of weeks at my desk collecting things in the electronics industry. Let’s review what everyone is talking about.

First, let’s get the negatives out of the way, starting with the big companies. Intel announced one of its worst Q4s ever on January 15. The very next week Intel announced that with would cut 6000 jobs by closing three assembly test facilities, halting production at its 200-mm fab in Hillsboro, OR and at its wafer production operation in Santa Clara. But wait, that’s not all. This same company that produces 76% of worldwide market for microprocessors is still in court battles with Advanced Micro Devices. AMD submitted a first complaint to the Commission in October of 2000 alleging that that “certain marketing arrangements in respect of ACER, Dell, Hewlett Packard, IBM and NEC, and certain of Intel’s pricing practices infringed Article 82 EC.” The Commission preliminarily stated that Intel had implemented an anti-competitive strategy to exclude AMD from or limit its access to the market for 86 microprocessors.

More bad news for those who listened in to Freescale’s Q4 results. Sales are down 33% as compared to Q3 results in 2008 and down 39% as compared to the same period last year. Sales were $940 million said Alan Campbell, in a Scottish brogue. Rich Beyer, chairman and CEO said, “We remain focused on further reducing our break-even point while ensuring we execute on our strategic growth initiatives and leverage our market leadership positions.” Did I mention that they’re still unloading the handsets from the Motorola connections, but now they’re willing to sell it piecemeal? More to come.