Today started off with a visit to the Vietnam-Singapore Industrial Park (VSIP). VSIP works to make life as easy as possible for companies to start operations in Vietnam. They provide area with a solid infrastructure, and they also work with various government agencies so that companies don’t need to spend time meeting and dealing with several entities, instead only having to communicate with VISP. VSIP is a joint venture between Vietnam and Singapore, Vietnam needed funding from Singapore, and Singapore needed space in Vietnam because the entirety of Singapore is about the size of a postage stamp. The companies located in this park produce many products, including those pictured below.
One of displays in the very fun room displaying examples of many products produced in the park displayed the products produced by II-VI, the company that was to be our second company visit of the day.
Alright, the display above looks a little boring. What the company sounds much cooler than it looks. II-VI creates optical components involved in lasers and sensors (as well as the actual lasers and sensors).
II-VI is actually headquartered in Saxonburg, Pennsylvania. In order to compete with the prices of global companies, they expanded into Singapore, where labor was much cheaper. When they wanted to expand out of Singapore, they opened a branch in China, again following the cheap labor. When they wanted to expand after moving to China, they opened a location in Vietnam, where, you guessed it, labor costs were lower. They chose VSIP specifically for several reasons, mostly boiling down to the conveniences provided by the park such as shortened red tape and expedited customs as well as II-VI’s good relationship with the Singaporean Government.
II-VI operations in Asia (especially in Vietnam) focus on producing items of quantity rather than items of complexity. (I know you were expecting quality but the amount of quality control for their products is insane!) This location produces many small lenses (also bigger ones, but many many small ones), as well as thermoelectric components.
Although moving to where the cheapest labor is available seems to be the behavior of a company which does not care for its employees, II-VI actually takes great care to maintain happy loyal employees. So, Tet is the Vietnamese new year, and it’s a huge holiday where everyone goes home to visit their families. During the company’s first year of operations, when the employees went home for Tet fifty percent of employees just did not return. Many of the Vietnamese decided to simply stay at home until they ran out of money and find work elsewhere when necessary. Since a good deal of training is necessary for most positions, employee retention is important to II-VI. (Training can take up to eight months.) Since the Great Tet Exodus the company has taken several steps such as intentionally timed bonuses and reimbursement for the bus ticket home and back for Tet in order to prevent such losses. Now only about two percent of employees are lost after Tet.
II-VI has taken hold of its destiny by identifying emerging market trends and being prepared to the needs of the future. With its great foresight II-VI has turned from small PA company to global enterprise.