Monique*
Tough times in the display business typically lead to utilization cuts and the eventual reduction in personnel if those lower utilization rates are sustained. Such was the case for most LCD display suppliers last year, and while little was said about lower utilization or employee reductions at Chinese producers, other panel producers were a bit more forthcoming about belt tightening. As public companies in Taiwan have a bit more public transparency than most, it has been a bit easier to see what has transpired to panel producers there than in other locations.
Last year, Innolux (3481.TT) promoted a program that encouraged employees to take consecutive vacations, reduced the number of foreign workers, and in some cases instituted a 3-day weekend schedule to reduce operating costs as utilization decreased in the later half of the year. AU Optronics (2409.TT) faced similar utilization reductions last year with programs similar to those at Innolux, but AUO has gone further, indefinitely postponed the construction of the company’s planned Gen 8.6 LCD fab in Taichung, the first capacity expansion project the company has undertaken in the last 5 years.
As we have exited 2022, with the display industry facing a continuing drop-off in CE product demand, both companies have instituted new projects, with AUO promoting its ‘Talent Activation/Revitalization Program’ and Innolux its “65 Project”. The AUO program is said to ‘help long-term senior colleagues with more flexible planning for the next stage of career development’, while the Innolux program is a bit more direct, providing incentives for those who voluntarily apply for retirement. While the programs tend to be laden with phrases like ‘…taking care of the physical and mental balance of colleagues…’, these reduction plans are part of the usual boom/bust display cycle that regenerates every few years Perhaps it makes management feel a bit better to couch the staff reductions in more ‘…we care…’ terminology, but we expect there have been few employees that saw the programs as anything other than what they were.
* Refers to the 1992 quote from then governor of Texas Ann Richards in reference to the President George Bush plan to use US warships to protect oil tankers in the Mideast. The quote was “Well, you can put lipstick on a hog and call it Monique, but it’s still a pig”.
Last year, Innolux (3481.TT) promoted a program that encouraged employees to take consecutive vacations, reduced the number of foreign workers, and in some cases instituted a 3-day weekend schedule to reduce operating costs as utilization decreased in the later half of the year. AU Optronics (2409.TT) faced similar utilization reductions last year with programs similar to those at Innolux, but AUO has gone further, indefinitely postponed the construction of the company’s planned Gen 8.6 LCD fab in Taichung, the first capacity expansion project the company has undertaken in the last 5 years.
As we have exited 2022, with the display industry facing a continuing drop-off in CE product demand, both companies have instituted new projects, with AUO promoting its ‘Talent Activation/Revitalization Program’ and Innolux its “65 Project”. The AUO program is said to ‘help long-term senior colleagues with more flexible planning for the next stage of career development’, while the Innolux program is a bit more direct, providing incentives for those who voluntarily apply for retirement. While the programs tend to be laden with phrases like ‘…taking care of the physical and mental balance of colleagues…’, these reduction plans are part of the usual boom/bust display cycle that regenerates every few years Perhaps it makes management feel a bit better to couch the staff reductions in more ‘…we care…’ terminology, but we expect there have been few employees that saw the programs as anything other than what they were.
* Refers to the 1992 quote from then governor of Texas Ann Richards in reference to the President George Bush plan to use US warships to protect oil tankers in the Mideast. The quote was “Well, you can put lipstick on a hog and call it Monique, but it’s still a pig”.
Lipstick on a Pig - Source: National Retiree Legislative Network
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