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For Jabil Circuit, Vietnam is the new China

HO CHI MINH CITY, Vietnam — Of the hundreds of foreign companies operating in Vietnam, St. Petersburg-based Jabil Circuit has an enviable distinction.

Its employees have never gone on strike.

In a country with a staggering 25 percent inflation rate, workers strike so often for more money that few companies have been spared. Jabil credits its success in avoiding walkouts to paying more than the minimum wage, offering generous time off and holding regular meetings for employees to air their gripes.

"We have very high-grade respect for people where we work," says Srithren Krishnan, Jabil's regional manager for human resources. "If you follow the rules of the road, I don't see any disputes here."

Jabil may also have newcomer's luck: It opened its factory barely a year ago in a huge high-tech park on the booming outskirts of Ho Chi Minh City, or Saigon as it is commonly known. The company leases 70,000 square feet in an airy pristine building where its 650 employees make inkjet printers for Hewlett-Packard.

Vietnam was a logical stop for the $17-billion-a-year Jabil, which employs more than 75,000 in 20 countries in the Americas, Europe and now Asia.

"As a global company, we keep moving from region to region to look for low-cost solutions for customers, and Vietnam is attractive," says Lawrence Chan, general director of the Saigon plant. "In general, there's a 30 to 40 percent cost savings here" over China.

Jabil won't say exactly what it pays, but Vietnam's minimum wage for unskilled workers in urban areas is $62 a month. By comparison, average monthly pay in the Pearl River Delta, China's prime manufacturing area, is $162.

Most Jabil employees work six-day, 48-hour weeks with Sundays off. Vietnamese labor law requires 12 vacation days for first-year-employees, but Jabil gives 15. Workers also get nine public holidays, including Victory Day — commemorating the April 30, 1975, fall of Saigon to the communists — and the Lunar New Year. Perks include free Wi-Fi and an in-house clinic with a full-time nurse.

Like other international companies in Vietnam, Jabil has brought in a handful of executives to help set up the operation and train Vietnamese to eventually run the factory themselves. Chan, who has been with Jabil seven years, makes his home in Singapore. Krishnan, who joined the company a year ago, lives in Malaysia.

As general director, Chan faces the usual challenges of doing business in the developing world. Vietnam's roads and seaports have not kept pace with the country's tremendous growth, meaning frequent shipping delays. The electronics industry is primitive, forcing Jabil to import 80 percent of its parts from China, Thailand and other countries, which adds to production time.

"We are struggling to localize 100 percent of our parts here," Chan says. "So-called electronics companies in Ho Chi Minh City are very limited to suit our printer business."

Somewhat surprisingly, the 11-hour time difference between Florida and Vietnam is not a major problem. As executives in St. Petersburg head home for the evening, those in Saigon are coming in to work, giving them all day to do whatever St. Petersburg requests. Moreover, many of the companies Jabil deals with also have Asian representatives who are closer in time and distance.

Among the biggest threats to foreign companies — and to Vietnam's economic boom — is the crush of strikes, some of them violent. In the first two months of this year there were 200 strikes by workers demanding higher pay to keep pace with what is now the highest inflation in industrialized East Asia.

The walkouts usually are short: "Companies give in because it's very costly to shut down production," says Herb Cochran, executive director of the American Chamber of Commerce in Vietnam.

To help keep any worker discontent in check, Jabil holds monthly meetings for low-level employees to discuss working conditions. And even though Jabil doesn't operate the food service in the high-tech park, its executives get an earful.

Employees "want more fruits, more meats, more vegetables," says Krishnan, the human resources manager. "But I feel it's okay to raise such issues. We are human, we need to eat, and if your stomach is filled, you are a happy man."

Susan Taylor Martin can be reached at [email protected]

For Jabil Circuit, Vietnam is the new China 06/06/08 [Last modified: Monday, June 9, 2008 10:44am]
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