Consolidation, Old Plants, Fairchild in Penang ends

My friend forwarded me a piece of sad news. One of the earliest pioneers of Penang’s Bayan Lepas Industrial park, Fairchild will be shutting down it’s Penang plant. This would be one out of many including facilities in West Jordan, Utah and Bucheon, South Korea. Major reasons stated was the need for consolidation as well as the need to close down older plants and build more advanced plants to keep up with the industry. By the way if you think they are closing only plants here, it’s not true. They are closing their own plant in Utah too. This gives us a question, so is the semiconductor industry going through a downtrend? If you go to google now, key in semiconductor industry, you may see that majority of the news are positive. So, at least this is not industry based.

How would this affect the property market? It really depends on whether the retrenched engineers and managers are absorbed fast or slow. The number is not that huge, 1,892 workers. For engineers and managers who are not overpaid, I think their next job is going to be easy. For those over paid but has never improved their skills for many years, I think they need a reality check now. Unless a few more factories suddenly announce their closure, I think this will be just a small red dot, not yet a dangerous red. As we know, there were a few MNCs setting up in Penang such as Sandisk and Haemonetics. This is joined by Seagate which will also be building another facility. No mention of the number of workers needed but 3 new facilities should be a good balance. Get more please.

I shared with my friends about Penang’s changing workforce. In the 1990s up till even the 2000s, majority of the Penang MNCs were still very low end. Many operators were needed. However, soon, more of the Design work was done in Penang. Many factories suddenly need more engineers and no longer just the operators. In fact some factories like my wife’s former company, Vitrox, the number of engineers exceed those of the lower end workers! More importantly, they are doing well and recently announced a huge jump in business due to the recovering market as well as penetration into more end customers. Seriously, the affordable properties needed for Penang are definitely shifting more towards the apartment types and no longer the low cost flats. For now, my personal conclusion is, this closure is manageable. Just make sure more are coming with higher end plants.

written on 26 Aug 2014

Next suggested article: Penang international airport expansion and full capacity in 2017

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