Thursday, September 18, 2008

A day at a factory

I invited myself to the factory. The company does not need media exposure or publicity. They don’t sell their products here. In fact the owner requested that there would be no mention of his name (let’s call him Mr. K), the company’s name, the brand names, etc. It was I who was interested to know more about what was going on in the factory, how production was, the workers, the size, the product. I had never been to something like this before.

I met Mr. K and his wife, through a friend, during the breath-stopping Cloud Gate Dance Theater performance at the Cultural Center of the Philippines some weeks ago. The show was part of the 50th anniversary celebration of the Ramon Magsaysay Award Foundation. The Cloud Gate’s founder Lin Hwai Min of Taiwan is an RM awardee (1999).

One day last week, I visited this Taiwanese-owned luggage factory (let’s call it the K company) just outside of Metro Manila. This factory produces some of the most expensive, if not some of the most durable luggage in the world, more expensive and more durable than the enduring popular brands that we know. That is what Mr. K, the Taiwanese owner, an electronics engineer, told me and he showed me why and how much the products cost abroad.

The K company produces 150,000 to 200,000 pieces of luggage every year. It has been operating in the Philippines for 13 years and employs some 700 workers. It used to employ 1,500 workers. All other luggage companies have left and moved to China (and are now not necessarily happy they did), except the K company.

The factory sits on 10,000 square meters of land. It is not inside an export processing zone. The production area occupies about 80 percent of the location and the rest is for offices, the cooperative-run canteen, the clinic, water purification (for drinking water which the workers could take home) and loading and unloading of goods. The huge production area is under one roof. If you are standing on the balcony of the second-floor office you would be overlooking the entire production area.

The place is spacious, clean, bright and airy. The ceiling is high. And from the balcony I could see hundreds of computerized machines and a sea of heads and hands at work.

Some 700 workers work on their machines or at their tables cutting, sewing, screwing, inspecting, assembling, labeling. The production and molding of the highly durable patented honeycomb plastic spine is custom-made in a separate section. The polycarbonate pellets (melted to make the honeycomb component) come from Singapore.

Most of the components are made-to-order and sourced abroad—the non-breakable patented zipper ear, the metal handles, the nylon thread as well as the fabric that is used inside and outside. The smooth leather for the really high-end items is from the Philippines.

Luggage of all sizes and dimensions adhere to airline requirements. The latest product is the checkpoint-friendly carry-on luggage that has a special section for a laptop. On it is attached a yellow label of approval which means the laptop need not be taken out for inspection because the X-ray machine could locate it easily and scan. The “TSA” label stands for travel security-authorization approved.

Zig-zag and double-stitching are some of the secrets of the luggage’s durability, Mr. K tells me, which you would see if you examine the product closely. Even the labels and tiny metal brand IDs are so well attached they are not going to get ripped and fall off during travel. Materiales fuertes, in other words. But you pay a fortune for these travel must-haves.

And then there are the imaginative practical details like the zips, secret compartments, instant expansion, easy grip and rolling. I thought to myself, you could travel to outer space with one of these. These products’ marketing catchword is “details make the bag”.

And why can’t we buy them here? Mr. K says everything they buy from abroad is duty free and this means all the products go abroad and aren’t meant to compete with local products.

And what about the workers? Some of the workers, like Jenny who is married and with two kids, have been with the factory for 10 or more years. Many came from other factories. There is no shortage of workers, Mr. K tells me. All these years the company has adhered to the law as regards wages, Mr. K says.

And why has he stayed? Mr. K says he wants to contribute something to this country. But he promptly adds that the Philippines must change many of its protectionist policies.

Taiwanese-owned factories have proliferated in China and Mr. K is not afraid to be quoted as saying that if Taiwanese companies would pull out of China, China’s industry would fall. The unofficial estimate of Taiwanese investment in China is about $100B, Mr. K says. Think of 100,000 factories employing 10 million Chinese.

Many Taiwanese investors are now choosing to go to Vietnam, India, Indonesia and the Chinese mainland’s interior, Mr. K points out. But not the Philippines.

I quote Mr. K verbatim: “The Philippines has to open up. Unions could be a problem. There are too many regulations. We cannot buy land and are subject to rent increases. We cannot go into retail.”

But, ah, the unions. Aren’t these the workers’ only protection? (I am a proud member of the Inquirer employees’ union.) In this age of globalization, unions are also starting to be globalized or join multinational trade unions. From the point of view of workers in the developing world this is an exciting development. More on this some other time.

Thanks, Mr. K, for the factory tour.