Philips Says It Will Keep Moving Jobs to Asia
Apr 7, 2004
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Dutch company Philips, Europe's largest consumer electronics maker, told shareholders that it would keep moving jobs to Asia and that critics of this policy were behind the times.

"Many people in this part of the world still seem unable to grasp the full implications of the dramatic rise of dynamic growth economies in Asia, such as China and India," Philips Electronics CEO Gerard Kleisterlee said.

"In order to remain competitive, companies are shifting jobs from the West to Asia. Initially in manufacturing, but increasingly also in support functions in service and research and development," he told the annual general meeting.

The export of jobs has become a politically charged issue in the U.S. and increasingly in Europe as recovering economic growth fails to be matched by rising employment, angering some voters in this U.S. election year.

Philips employs more than 47,000 staff in the Asia Pacific region, or 29 percent of the total number of employees, up from 26 percent 2 years ago. Philips cut some 22,000 jobs in North America and Europe between 2001 and 2003.

Mr. Kleisterlee said China and India were just the latest in a string of nations that had developed an export-driven industrial base since 1950.

"(China) is quickly becoming the electronics factory of the world. Increasingly, however, it is also becoming a base for research and development, driven by the availability of a vast number of highly educated engineers and scientists," he said. He also said productivity per dollar labor cost was five times higher in China than in Germany and three times higher in India than in Germany.

"The end of this process (of shifting jobs out of Europe) is not yet in sight," Mr. Kleisterlee said, although he added that Philips would not turn its back completely on Europe.

"We are big here, and we will remain big here, although the nature and scale of our presence will change," he noted.

Mr. Kleisterlee was upbeat about a few high-technology areas in Europe, one of which was in the triangle between Eindhoven in the Netherlands, Leuven in Belgium, and Aachen in Germany.

"Let's stop clinging onto outdated standpoints" he said, adding that issues like labor flexibility should be addressed with an open mind. (Reuters)

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