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Samsung Factory Striving to Remain Competitive

Posted February. 26, 2007 07:23,   


It is 4:00 p.m. at the air conditioner factory of Samsung Gwangju Electronics (a subsidiary of Samsung Electronics in the Gwangju area) in Gwangju on February 23 – a Friday.

In these times of five-day workweeks, most workers elsewhere would be planning their weekend. Here at this factory, 480 workers are busily attending the seven production lines.

“One air conditioner is assembled every 15 to 18 seconds,” said Song Byung-in, the group leader. “With orders for summer up almost 250 percent, we are going to have to come to work on Saturday and Sunday.”

Song should be happy, but he sounds worried.

“We are doing all we can to increase productivity and lower costs. If we fail to, all the work will go to factories abroad.”

The microwave production lines of Samsung Gwangju Electronics relocated to Malaysia and Thailand in early 2004 to keep up with Chinese competitors.

Working with all their might-

Most home appliance production lines were relocated from Samsung Electronics’ Suwon factory to Gwangju in 2004. This was when the ratio of exports and domestic sales of air conditioners was six to four. The company maintained a competitive edge over foreign competitors back then. But despite unceasing efforts to lower cost, the company started losing export share to Chinese companies. Last year, the ratio of exports and domestic sales was two to eight.

“Given the characteristics of our industry, back then we decided that land and labor costs would be cheaper in Gwangju than in Suwon, which is near Seoul. If we cannot compete here, there is nowhere left in Korea to go. That is why we are working so hard,” said Yoon Eui-chang, an executive officer at Samsung Gwangju Electronics.

“We work with patriotism,” explain some employees in the factory with grave faces. This is because the company would have to build a production facility abroad for our exports if this factory is not cost competitive.

‘You have to be the best in the world to survive,’ reads a big banner posted in the wall of the 7,400-pyeong air conditioner factory. There is a campaign to shorten the time it takes for one employee to assemble an air conditioner. Even one second means a lot to these workers.

To give an example, the employees fixed the assembly process so that a worker does not have to turn 180 degrees to grab the next assembly part. This saved 1.06 seconds.

Some 50 manufacturers are lined up next to an employee inspecting the Hauzen air conditioner “André Black.”

“This is so that the manufacturers can get to work the second the inspection is over,” explains Deputy Manager Yoon Tek-hyun.

Gwangju loves Samsung-

Both the local government and the people of Gwangju support Samsung Gwangju Electronics. The subsidiary pays its corporate tax to Gwangju City and not Seoul. It is a genuine Gwangu company.

Gwangju City Council passed a legislation that names 4.7 km of public road that leads to Samsung Gwangju Electronics “Samsung Road” in February 2005. When independent truckers staged strikes last year, more than 1,200 civilians demanded that it leave Samsung alone.

“Samsung has its roots in Gyeongsang Province. But with Samsung Gwangju Electronics contributing to Gwangju’s economy, it is leading the way in uniting the nation,” says Seo Min-ho, the head of personnel at Samsung Gwangju Electronics.

This company accounted for 960 billion won of production in the Gwangju and Jeonnam region. It created new jobs for not only people of Gwangju, but nearby areas including Naju City, because it has cooperative enterprises.