Electronics hums with home-grown firms, US 'big boys'
Manila — Danilo K. Dimayuga, vice-president of Stanford Microsystems Inc., sounded somewhat concerned. "Because of the economic situation in the United States," he said, "we are more cautious in terms of expanding our facilities. We are not laying off people. But we are taking a more conservative stand at this time. We are watching to see how the US recession affects Europe and Japan."
Presumably any situation is relative, but most corporate executives in the US would be glad to have Mr. Dimayuga's sales problem. He expects company revenues to grow at least 40 percent in the fiscal year that began in July. Even though inflation was running at a high of 25 percent in the Philippines last march, a 40 percent sales growth for the packaging and assembly of electronic components represents a substantial real gain.
However, Mr. Dimayuga was comparing that growth with 60 percent in the previous fiscal year and 70 percent the year before that.
Stanford Microsystems sprang from a case study by the company's founder, Cristino C. Concepcion Jr., done at Harvard's School of Business Administration, regarding the feasibility of assembling components in the Philippines.
The young engineering graduate (Stanford University) went home and put theory into practice. First, in 1969, he founded Stanford Associates Inc., which puts together core memories for computermakers; it now employs 500 people. A year later he started Stanford Microsystems. It now has 7,000 people on its payroll, some 90 percent of them female, because of their "patience and nimble fingers," the founder says.
Mr. Concepcion's pioneer electronics firms have been joined by about 10 other Philippine "independents" and several more subsidiaries of US companies.
Texas Instruments has just been completing a factory in baguio which will eventually provide 5,000 jobs. Other American companies with plants here include Motorola, Fairchild, Intel, Signetics, National Semiconductors, and Advanced Micro Devices.
Notes Roberto V. Ongpin, minister of industry: "From virtually nothing in 1972, the Philippine exports in electronic products rose to about $300 million in 1979. We expect this industry to grow at an annual rate of 25 percent over the next five years."
The industry today employs some 35,000 Filipinos.
Mr. Dimayuga is convinced the Philippines will continue to compete successfully with other Asian nations for the assembly business. "We have got the human resources . . . intelligent people . . . a high literacy rate. And so far we are cheaper than Taiwan, Hong Kong, South Korea, Singapore, and even Malaysia."
Mr. Ongpin says, "Our success in having attracted the 'big boys' at the US electronics industry . . . speaks well of the Philippine investment climate."
Stanford Microsystems subcontracts to make electronic devices according to specifications for many prominent electronics companies in the US, Japan, and Europe. For instance, it sells to Motorola, Sprague Electric, Solid State Scientific Industries, Hughes Aircraft, and so on. The components are likely to end up in television and stereo sets, computers, military hardware, watch modules, smoke detectors, washing machines, air conditioners, refrigerators, and so on.
Donald Green, US marketing manager in Los Altos for a marketing subsidiary, Stanford Microsystems International Inc., says sales have been going "reasonably" well despite the recession, especially in telecommunications and memory devices. Sales of components for consumer electronic products have been "weak," however, he says.
A few years ago, Stanford Microsystems sold some 70 percent of its output to companies in the US and Canada. Now about 40 percent apiece goes to Japan and the US and the remaining 20 percent to Europe.
"We have a pretty wide base of customers," says Mr. Dimayuga.
the firm's factory workers start out at the minimum wage of about $1.72 a day , plus other benefits that could add up to an average of about $3.44 a day. They get wage boosts after a tryout period of 90 days. With so many young people entering the job market here, Stanford Microsystems has no trouble hiring young high school graduates for its assembly operations. Turnover is a mere 7 percent a year, low by US standards.
Mr. Dimayuga noted that he has a tougher time attracting technical personnel. They are in demand not only here, but in foreign countries, particularly in the Middle East.
Since all of the company's products are exported, stanford gets preferential tax and financing treatment from the government.
It has two plants in the Manila area. They are working three shifts a day. The company has installed emergency diesel generators to eliminate the problem of electrical brownouts in the Manila area.
The latest sales figure, for the three quarters ended March 31, 1980, amount to about $28 million. Profits were $3 million.