Specialty Tech geared

Although the outlook for the automotive and electronics industries is murky for the coming year, medium-sized parts-manufacturer Specialty Tech has been preparing itself since 1999 to handle such an economic crisis.

Specialty Tech supplies parts for 25 global manufacturers in the electronics and auto sectors, including Seagate, Nikon, Canon, Thai Summit, Toyota and Honda. Its plant is on the Rojana Industrial Estate in Ayutthaya.

Administration manager Pornchai Chungbunsri said the company had been strongly affected by a sudden decline in orders as a result of the credit squeeze and its customers' lower sales across the world.

"We have seen the obvious signs, since many plants in Rojana have launched early-retirement programmes. This situation has shocked small and medium-sized part-makers, who cannot adjust themselves to immediate global changes," he said.

Before 1999, Specialty Tech was 100 per cent involved with supplying parts to electronics and auto companies, which had enabled the firm to grow more than 30 per cent every year.

However, it decided to diversify into supplying packaging products for the food and drug industries after the expensive lesson learnt from the 1997 financial crisis, when the auto and electronics sectors slumped.

"We know that it is difficult for food and drug companies to become insolvent because the items they make are essential for consumers, even when the economy slumps," he said.

Nowadays 70 per cent of its sales revenue is generated from automotive and electronics companies, and the rest is from food and drug firms.

Apart from the market shift, Specialty Tech has adjusted the way it manages its employees' compensation.

Pornchai explained that the company was increasing production workers' salaries by 10-15 per cent, while office staff will get 3 per cent as they are on a higher salary base. Seventy per cent of its employees work in the factory.

Despite a sharp drop in sales to auto and electronics firms, the company has no policy to lay off employees, though it has reduced the number of working days per week from six to five in order to balance production and orders.

However, Specialty Tech has provided financial support to encourage employees to study at weekends to enhance their competence.

"Our policy does not give much weight to paying big bonuses, but we will concentrate on a good welfare system and allocate a part of the revenue as an educational fund for them, so our employees will not be badly hurt during tough times," Pornchai added.