Foxconn/Sony TV-Production in Slovakia

by gongchao/kpk (April 2013)

Français | Slovenčina

1996

Sony entered Slovakia in April, building a new plant near Trnava for producing components for TV-sets used in TV-assembly plants in the UK, Spain, and Germany. Trnava is about 50 kilometers east of Bratislava and had a population 65,000 in 2011. Sony bought an industrial area which had previously been used for warehouses. In August, trial production started in Trnava, with about half the machinery transferred from other Sony plants. Initially, 350 to 400 people were employed in three-shifts. Production was started at a time when the construction of the plant had not been finished entirely. Groups of workers were sent for internships to Japan, Germany and the UK, and half of the costs were paid by the state. The initial wage presented in job advertisements was SKK 4500 (about 150 USD at the time)¹ before taxes and without overtime and shift bonuses, not much by the common standards in Slovakia.² The minimum wage in 1996 was SKK 2,450.

1998

500 TV-sets per day were produced in Trnava. Sony worked with subcontractors in Slovakia, the first ones being packaging producers and a local company producing plastic cases.³

1999

The devaluation of the Russian ruble caused fluctuations on the market, affecting production in Trnava. 40 workers out of a total of 600 were temporarily sent to other companies.⁴ Sony was not contemplating reducing production, because the location in Trnava was viewed as strategic for markets in Russia, Poland and Ukraine.

2001

Sony planned to double production within 2 years. In 2001, it employed 1,137 workers on average. The plant became the biggest producer and exporter of TV-sets and TV-components in Slovakia. The yearly production amounted to about 600,000 units destined for the European market. Other components were used in Sony plants in the USA as well as in Britain, Spain and China. At this time, Sony used 26 local subcontractors, which were about 20 percent cheaper then the foreign ones, with 55 percent shorter supply times.⁵

2004

Total production (TV-sets and components) reached 9.55 million units in 2004 (up by 18 percent in comparison with 2003). Only 2 percent of the entire production were sold in Slovakia, but still formed 51 percent of TV-sales in the country. Revenue grew by 11,2 percent in 2004. From 1996 to 2004, the total investments reached SKK 1,6 billion or 40 million euros (SKK 300 million or 7,5 million euros in 2004 alone). A service center for Playstation consoles, the biggest in Europe, was built. The workforce totaled 1,598.⁶

2006

Sony switched the screen-technology from CRT to LCD, and it announced its move to Nitra, a city about 90 kilometers east of Bratislava with a population of 85,000 in 2006, which made it the fifth largest city in Slovakia. The reasons given were a four-lane expressway (connecting Nitra to Trnava and Bratislava) and space for further expansion for Sony and subcontracted plants. Nitra had also higher unemployment than Trnava, where the lack of suitable workers posed problems. The advertised wage was SKK 14,000 or 373 euros (the minimum wage in 2006 was SKK 7,600), including bonuses and overtime.⁷ Sony was planning to employ 3000 people, half of which were to commute from Trnava. The planned yearly capacity was 3 million TV-sets, the total investment was 73 million euros (SKK 2,735 billion), and Sony received generous assistance from the state: SKK 380 million (over 10 million euros) had to be used to develop infrastructure in Nitra, and under EU law, at most 15 percent of the Sony investment could be covered by the state. Sony demanded to use 90 percent of this to buy technology. Sony also demanded no penalization if only 80 percent of the entire project was realized. The 1,500 new jobs created had to last at least five years. There was a seven-year profit tax exemption.⁸ In 2010, more information on subsidies became available. The total direct subsidy amounted to SKK 1,17 billion (38,8 million euros), the total tax savings were SKK 408,6 million (13,56 million euros).⁹ Information from 2012 said that the state in fact paid for about 42 percent of Sony’s expenses, making it the largest assistance program in Slovakia.¹⁰

2007

In October, production started in the Sony plant in Nitra. The plant from Trnava was moved line by line. 600 workers produced Bravia LCD TV-sets in Nitra. In full capacity, the plant in Nitra was expected to become the main supplier of Bravia sets for the European market, along with the older Barcelona plant.

2008

The Japanese subcontractor Ryoka invested SKK 300 million (almost 10 million euros) and employed 270 workers in Nitra.¹¹ The company faced difficulties finding employees for technical positions and shift leaders, for which English was required. The South Korean producer of plastic shells, Daidong, began plant construction in Nitra, as well as the Spanish producer of metal shells, Farguell, and the Japanese supplier of plastic components, Meiki. Sony planned to build a new plant next to the existing one in Nitra. However, for the first time in 50 years, Sony recorded losses in 2008, and demand on the world market declined. By this time, Sony had invested a total of 82 million euros in Nitra. The plant was already the biggest Sony TV-factory in the world.¹²

2010

Foxconn bought the Sony plant in Nitra. Employment conditions, subcontractor relations and production quotas were fixed in the contract for one year. After that, Foxconn’s hands were no longer tied.¹³ In 2009, it had already acquired a Sony plant for LCD TVs in Mexico. Sony increased the share of subcontracted LCD TV supplies to 40 percent (from just 5 percent in 2009). Sony kept a 10 percent share in the Nitra plant, and Foxconn planned to sustain the Bravia production and increase the capacity within two years from the 5 million units planned for 2010 to 7,5 million units, while increasing the workforce by 20 percent. In June, about 2500 people were employed in Nitra. The Sony plant in Barcelona was sold to two Spanish companies (Ficosa International and Comsa Emte). This marked the end of Sony production (under its own name) in Europe. The Barcelona plant had been in operation since 1973 and had employed 1,100 people.¹⁴

2011

In January, the Foxconn plant in Nitra planned to increase production by 50 percent and the workforce by 30 percent. However, in May production started to decline, and workers were sent home with no wage. The union filed a complaint with the Labor Inspectorate, also about the uneven distribution of working time, the organization of shifts without consulting the union, and about not providing any premises for the union. There was a works council in the company which was under the control of management. The union representative was tricked out of the election to the works council, and the representatives in the council – not a single production worker, but all white-collar workers – approved of the changes in working time and shifts made by the company. After the earthquake in Japan, problems with supplies occurred and work in Nitra was reduced to one shift. The wages fell from 420 euros to about 370 euros after taxes.¹⁵ In June, the plant officially switched to one shift, allegedly because of the seasonality of the production and new investments in the lines which had raised daily output by 40 percent and allowed to produce several models at one line. At this point, about 3,000 people worked in the factory. In July, a department consisting entirely of core workers was shut down and the workers transferred to other positions. About 60 agency workers were dismissed. A company representative said that the share of agency workers was 10 to 20 percent at this time.¹⁶ In 2010, the factory had produced 2,6 million units, in 2011 it was 2,1 million.

2012

Foxconn announced mass redundancies due to a sharp decline in demand for Sony TV-sets. It planned to reduce the workforce by 600 to 1,800 employees. Later this was reduced to 430 dismissals, including both production and white-collar workers. Meanwhile, the Labor Inspectorate made the final decision on the union complains against Foxconn. While the first verdict in May 2011 had taken the side of the union, this was now cancelled. The Inspectorate claimed that Foxconn’s procedures regarding shifts and working-time were fully in line with the regulations, because management had consulted the works council.¹⁷ In September, a manager announced that orders from Sony had fallen by one third (compared to 2011). While at its height in 2008, the workforce had been nearly 4,000, it had declined since and reached 2,100 in September 2011 and less than 1300 (most of them core workers) in September 2012.¹⁸ At this point, only one shift worked on 22 lines (out of 32). The subcontractor Ryoka closed down and dismissed all 227 employees in November 2012. Only one subcontractor remained near Foxconn in Nitra:
Meiki, a producer of plastic components.¹⁹ Foxconn declared that the Nitra plant was of strategic importance for European markets and denied any plans to leave, even though only 50 percent of the production capacity
was used.

Footnotes

1 The exchange-values of Slovak crowns (SSK) in US-dollar or euro are based on the respective monthly rate at the time (see: http://www.nbs.sk/en/statistics/exchange-rates/en-kurzovy-listok/nbs-monthly-cumulative-and-annual-exchange-rates).

2 “Japonská robota – slovenský plat”, Slovenská republika – Víkend, Feb 14, 1997, no. 7, p. 3.

3 “Produkty trnavského závodu Sony sú určené pre strednú…”, Národná obroda, Jan 29, 1998, no. 23, p. 3.

4 “Ambície Sony Slovakia”, Pravda, Mar 30, 1999, no. 074, p. 2.

5 “Sony v Trnave zdvojnásobí výrobu”, Sme, Oct 31, 2002, no. 254, p. 7.

6 “Sony Trnava plánuje vyrobiť milión televízorov”, Pravda, May 20, 2005, no. 116, p. 13.

7 “Sony v Trnave síce končí, ale ľudí hľadá ďalej”, Hospodárske noviny, Sep 26, 2006, no. 183, p. 13.

8 “Stimuly pre Sony neprekročia 15 % investície”, Nov 2, 2006, http://openiazoch.zoznam.sk/cl/48973/Stimuly-pre-Sony-neprekrocia-investicie.

9 “Sony je na predaj. Chcú ho Taiwanci”, Hospodárske noviny, Mar 29, 2010, no. 60, p. 13.

10 “Foxconn má prepúšťať, riskuje stratu dotácií”, Sme, Jan 17, 2012, no. 13, p. 7.

11 “Za Sony prichádza Ryoka”, Hospodárske noviny, Apr 18, 2007, no. 75, p. 13.

12 “Sony odložila nitriansku megainvestíciu”, Trend, Dec 11, 2008, no. 49, p. 10.

13 “Japonci predali vlajkovú loď”, Trend, Apr 8, 2010, no. 14, p. 32.

14 “Sony v Európe s televízormi končí”, Trend, Sep 16, 2010, no. 37, p. 29.

15 “Foxconn necháva pracovníkov doma bez mzdy”, Pravda, May 30, 2011, no. 124, p. 10.

16 “Foxconn na jednu zmenu”, Trend, Jun 6 2011, no. 22, p. 31, “Taiwančania prepustia stovky ľudí”, Hospodárske noviny, Jul 15, 2011, no. 136, p. 11.

17 “Inšpektorát práce vo Foxconne nezistil porušenie predpisov”, Pravda, Mar 21, 2012, no. 68, p. 10.

18 “Foxconn prepúšťa brigádnikov”, Hospodárske noviny, Nov 2, 2012, no. 212, p. 13.

19 “Sony sa vracia do Nitry”, Trend, Sep 14, 2012, s. 36, no. 40., „Investor z Nitry končí. Prepustí stovky ľudí“, Hospodárske noviny, Oct 23, 2012, no. 205, p. 1.