Guangdong province's reputation as China's manufacturing powerhouse continues, despite worries over increasing rural unrest among migrant workers, wage increases and negative publicity about factory conditions, even in facilities run by multinational companies.
Clinton, Mass.-based injection molder Nypro Inc. has two of its 13 Chinese facilities in Guangdong. In a recent interview, Nypro's K.F. Wong, general manager of Guangzhou Nypro Molding Plastics Products Co. Ltd. near Guangzhou, said the company does not worry as much about employee turnover and social unrest as nearby factories.
``In China there are so many factories that don't comply to the labor law. Our company follows the labor law 100 percent, so turnover is very low,'' Wong said.
He added that some long-term workers have bought apartments nearby with a view to staying in Guangzhou rather than returning to their rural roots.
Nypro has a long history in Greater China, opening a plant in Taiwan in 1976, then moving to Hong Kong the following decade and expanding to the mainland with Shenzhen-based Nypro Plastics & Metal Products (Shenzhen) Co. Ltd. in 1993.
Nypro has had plenty of time to gain the kind of insider knowledge many companies use to cut corners - like not paying full employee benefits as required by labor law - but such practices can lead to high turnover and employee unrest in the long term.
Lean brings rewards
In a culture that still sees extravagance and waste as taboo even after more than 20 years of massive economic growth, Nypro's dedication to a relatively new business concept - lean manufacturing - could be one of the reasons the company has gained the respect and loyalty of its employees.
The company has a worldwide recognition and rewards system to get workers involved in making processes easier, a key objective in lean manufacturing. Nypro headquarters lets local managers choose the appropriate types of rewards to give employees. Awards range from meals at restaurants to gifts and even cash. Managers keep track of ideas for improvement and awards on a spreadsheet, which feeds back into headquarters.
For example, one worker suggested an improvement on pad-printing machines. Employees had been using the plant's 20-odd single-head machines to print names like PalmOne and Verizon on telecommunications equipment in the Panyu factory. The worker suggested developing a machine with four heads, saving time for the workers and increasing the number of parts they can stamp per second.
The changes to the machine's design were implemented easily, as Nypro does most machine development in the plant. The company's main machine and tooling facilities are in Hong Kong and Suzhou, with a larger tooling facility under development in Shenzhen.
Process maps - flow charts typically seen on the walls in plants using lean manufacturing techniques - come from a database at headquarters, but the language on the maps has been translated to bolster cultural understanding.
For example, a U.S.-based Nypro plant's recycling-process map labeled ``Waste not, want not'' can be seen in China with the culturally savvy phrase, ``Eliminate the 4 wastes.'' Historically, a similar phrase, ``Eliminate the 4 harms,'' was used in China to publicize campaigns to exterminate pests.
Process maps make up only one part of Nypro's internal systems. Training remains a large part of the company's backbone for both engineers and workers.
Engineers, usually hired from local technology universities, must pass examinations to enter the company, and then they spend time in intensive training programs each year. The initial program starts with three months in Nypro Hong Kong's training facilities with other programs at the Nypro Institute in Massachusetts.
Sam Yim, general manager of Nypro Plastics & Metals Products (Shenzhen) Co. Ltd., worked his way through Nypro's training and up the management ladder. He has worked for the firm 15 years.
Yim oversees the workings of the Shenzhen site, which started out with one machine 13 years ago. The site now has 86 machines in one plant, and a second plant, with 290,625 square feet of space, is expected to open later this year with 26 machines.
The Shenzhen site lays claim to running the oldest paint line in China. Nypro Shenzhen now has four paint lines, with the newest one using state-of-the-art painting technology in a Class 100,000 clean room.
Worker training continues to be a key element for ensuring product quality. Before starting on a production line, workers receive one week of training in a basic clinic, followed by technical training. Then new workers shadow an experienced employee before being placed on a test assembly line.
Employees also receive cross training on different product lines but not competing lines.
``There is a separation of work areas and even isolated customer-service teams,'' said sales and marketing director Jerry Chung, who believes one reason Nypro gets repeat customers is because of its concern over protecting intellectual property.
Former Nypro Chief Executive Officer and current Co-Chairman Gordon Lankton set the company standard for making Nypro a ``very integrated team.'' He visited every Nypro-owned plant at least once a year, according to employees. Of course, Lankton started the practice at a time when the company had seven plants based mainly in North America, and now the company runs 66 plants worldwide.
Fortunately, technology and employees have provided some assistance in keeping the company's various units integrated.
The China team developed a Web-based system called ProM for keeping track of product design and development projects. The system uses common codes for developing a product.
Another system, Winchill, a password-protected database, allows project members to access information in a timely manner. It also aids intellectual property protection.
Systems like Winchill and ProM lessen the need for midnight telephone calls and easily lost or leaked faxed materials.
The systems allow virtual design teams to work together on product design and implementation. A virtual team can include members from any of Nypro's design centers in the United States, Europe or Asia, and the team leader is the member based in the area in which the product will be sold.
Still, face-to-face meetings remain an important aspect of Nypro culture. Automotive unit business manager Larry Bell said customers worry about getting the same product from different locations around the world. So, the lead designer travels to the manufacturing plant for qualification and integration of the production team.
Starting with one machine in its Shenzhen site 13 years ago, Nypro now makes a full range of products in China, including computer casings and peripherals, telecommunications equipment, health-care products and auto parts.
The processes offered also have broadened over the years from pure injection molding to two-component molding, insert injection molding, in-mold decoration, reel-to-reel in-mold labeling, clean room molding and decorative painting, representing the typical processes required by international and regional clients.
Nypro facilities in Guangdong sell 50 percent of their products domestically.
``Customers are under high pressure to take out costs from the supply chain,'' Bell said.
Suppliers must provide products more quickly and efficiently to keep their businesses running.
Recently, Shenzhen Nypro General Manager Sam Yim set up a portable clean room in one week to produce a self-test blood-glucose meter for Abbott Laboratories. Three years ago, setting up a clean room took Yim and his team a few months. An efficient supply chain allows the plant to make more complicated and advanced products, particularly health-care products, available to consumers in China.