Labor shortage hurdle to Quanta Group return
By Kathryn Chiu,The China PostTAIPEI, Taiwan -- Wrestling with a worsening business climate in China, Quanta Group Chairman Barry Lam on Wednesday said he's willing to move manufacturing of some products home if labor shortage is no longer an issue.
August 15, 2013, 12:07 am TWN
Barry Lam (林百里) issued the statement at a news briefing yesterday when asked to speak about his suggested cures for Taiwan's anemic economic growth.
“I don't have a panacea for Taiwan's economic growth, after all the economic pundits and gurus have offered their action plans,” Lam said. “However, as far as I know, an increasing number of Taiwanese companies are thinking about investing back in Taiwan if labor shortage issues can be solved.”
The investment environment in China is rapidly deteriorating as the rising costs of labor, raw material and land are squeezing business profits, according to United Evening News.
Lam told the media briefing that the labor shortage, rather than industrial land supply that hindered growth in the past, is the major obstacle to investing back home and emphasized that Quanta Group (廣達集團) is willing to move manufacturing of some products back home if Taiwan can supply a sufficient labor force.
Although he has discussed with related government agencies about Taiwan's labor supply, it seems that the Cabinet hasn't come up with any solution so far, Lam added.
Quanta Vice Chairman and President C.C. Leung (梁次震) yesterday revealed that the products Quanta is considering for domestic manufacturing are the less labor-intensive products, such as wearable products.
Leung said the benefit of back-home investment lies with the rippling-out effect that results in raised domestic demand, creating plenty of business opportunities to peripheral industries, including the service sector, transportation sector and communications sector.
Q2 EPS Sinks to 10-quarter low
Quanta's Q2 earnings per share (EPS) fell to the lowest level since posting NT$0.61 in the fourth quarter 2010, according to the latest update of its financial results.
Quanta had a second-quarter net income of NT$4.02 billion, or NT$1.05 per share, down from net income of NT$4.45 billion and earnings per share of NT$1.16 in the previous quarter.
Consolidated revenue was NT$191 billion in the April-June quarter, down 3.3 percent from the first quarter, but the company's operating margin continued to improve from 1.3 percent to 1.45 percent over the same period.
Quanta's July sales grew to NT$71.7 billion, a month-on-month growth of 5 percent and a record high for the past 12 months. But in July, it shipped only 3.2 million notebooks, a drop of 22 percent from the previous month, reflecting weak demand from vendors.