Management Issues: Sanmina-SCI
Company Description
Based in San Jose, California, Sanmina-SCI provides Electronics Manufacturing Services particularly in the “delivering complete end-to-end manufacturing capabilities and highly complex solutions to technology companies around the world” (Sanmina-SCI, 2006) It boasts manufacturing facilities and operation in over 20 countries around the world. I chose this organization as I have personal working experience in this company.
Management Issue
Current issues in management involve the relationship of managers with the workforce inclusive of which are issues on handling diversity, unions, human resource management and self-directed work teams.
The focus of this paper is Human resource management, particularly the concept of Redundancies as applied in the case of Sanmina-SCI.
Redundancies is said to be the dismissal of employment as a means to rationalize the cutting down of costs or an employer suffering in his/her business that would require relocation. It is a touchy subject that must be dealt with care. Employers in their part must not only offer explanations, be fair in the choosing of redundant people but they must also express their utmost regret and at the same time, gratitude to the unfortunate worker (Harriott, 2002).
Redundancy should be ended with a sense of respect and justice. Most often than not, redundancy is performed with a lack of consideration in the employees’ part. This is because a Redundancy may not sound as unfortunate as it seems and employers end up appearing as “executioners”. In order to save the company, the employees must be sacrificed in its expense. Employees will tend to feel undervalued and be generally resentful of such a decision (Harriot, 2002, p. 15).
This has been the case of the mass lay-off of 300 employees in Sanmina-SCI’s Greenock,Scotland plant during the 2005 Christmas break. This is brought by external factors related to the location of the plant, Scotland itself. Sanmina-SCI has been cutting down expenses through transferring production overseas such as in Eastern Europe and China.
The Scotsman reports that the workers (originally 650) were formerly from IBM who moved to Sanmina thanks to an outsourcing deal. When it was IBM that decided to move out of production, it was Sanmina that received these laid off workers. This time around however, it was Sanmina’s turn to tighten their belts by laying-off these workers due production location change. It has been having a history of laying off workers from December 2003 when it removed 250 workers as they moved production to Hungary. A year before this, Sanmina has closed down its Ayrshire factory that led up to 400 jobs lost due to the factory closing. Thus, the shutting down of its Scot based factory is not a first incident, and is in fact, only one of already several movements of laying-off hundreds of jobs due to location costs. This is another reaction of a seemingly diminishing electronic industry and the globalization phenomena. Low production costs due to cheap data processors are said to be the main reasons why jobs had been primarily laid off (Marland, 2006).
Richard Ball (2006) had also reported than Sanmina’s revenues had begun declining from .2 billion in the year 2004 to .7 billion in the year 2005. Its net loss similarly increased drastically in this regard as its net loss of 11 million dollars in 2004 had rose alarmingly to 996 million dollars in the year 2005.
Sanmina has been receiving several criticisms because of their layoffs and repeated claim of redundancies deeming the company to be insensitive to the workers and their family, heightened by the circumstance that the lay off was performed during the Festive season. Also Sanmina’s management was also criticized as disappointing and incapable of looking due to the fact that the plant was only about to reach its first year. Sanmina was said to be falsely optimistic about the plant and that the employment has suffered tremendous damages due to Sanmina.
Congressman John F Tierney (2004) also pointed out how the laid off workers of Sanmina are top skilled and loyal employees of Sanmina spanning for over 20 years. They have experience and at the same time loyalty to the corporation but their employment will have to be compromised in favor of cheaper production costs elsewhere. The concerns of these laid off workers is the difficulty to be supplemented with another job.
In the year 2005, laid-off Sanmina workers had arranged for a employment tribunal that will put Sanmina in a compromising position due to claims of mass redundancies. According to the Greenock Telegraph, these workers were rewarded £150,000 to compensate for their removal. The former employees were fervent in their belief that they were maltreated and poorly dismissed (Greenock Telegraph, 2005).
Other criticisms concern Sanmina’s inability to foresee the mass layoff which would have been perceived earlier on. Despite Sanmina’s defense that it has been due to expensive labor costs and industry downturn, critics and employees would see the act as motivated by nothing more than taking advantage of the situation. According to Anthony Clark (2002) Sanmina is merely taking advantage of the circumstances of outsourced employees. The complaint of British workforce is mainly that they do not have sufficient protection against redundancies unlike the other workforce.
Sanmina-SCI intended a 90-day closing period. As the issue is still freshly released, there is still much that may develop about this matter. Sanmina-SCI is a classic example of a company suffering under economic downturns and must make the decision to shut down production in costly areas and lay off all its workers. Whether or not Sanmina-SCI is able to be fair and concerned of its employees remains to be seen. Sanmina-SCI has had a record of displeased and dissatisfied laid off workers. It remains a question whether Sanmina-SCI has truly considered the circumstances and situations of these workers, put them in the context of their country’s laws and at the same time, protected and looked after their welfare such that employers need to do. This case only emphasizes how Redundancy is a tricky situation and would require the extra efforts of the employer to truly attempt to end the lay off in a manner that is with fairness and respect. By laying off hundreds of workers puts Sanmina-SCI in an immediately disadvantageous position especially if this is performed in the beginning of the year. It has indeed the heavy burden of going out of its way (rather evading the employees and treating the issue as strictly professional and formal) to ensure that the redundancy is performed not in the electoral tribunal as reported earlier. Sanmina-SCI must take extra note that some of the workers it sacked have already been with them since IBM transferred the employees to their care. Most of them would have taken years in the computer company and have consequently gone old. They and their families need their own special compensation. Continuous dialogue in the part of the management themselves is essential in order to appease and support the dismayed employees.
Credit:ivythesis.typepad.com
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