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Taiwan's Hon Hai set to spin off units
by Staff Writers
New Taipei City, Taiwan (AFP) June 26, 2013

US boss still hostage in China as labour row drags on
Beijing (AFP) June 26, 2013 - An American factory boss remained hostage to staff at his own work site outside Beijing for a sixth day Wednesday over a labour dispute that has highlighted employer-worker tensions in China.

Chip Starnes, who arrived from the US-based Specialty Medical Supplies to lay off 30 workers, was barred last Friday by the remaining 100 from leaving the premises until a resolution is reached.

Starnes has lived in his office while workers guard the premises and negotiations proceed, involving legal counsel on his side and the local Huairou district labour union.

"There's no agreement that's been reached," he told AFP by phone. "It might be another day or two at least."

Starnes said he has access to food, water, a cot and a shower, and that local authorities have checked on his safety, but otherwise declined to set him free.

Incidents of workers detaining their employers are not frequently reported in China, but labour disputes are common.

Many workers fear bosses will shut operations and skip town without paying wages, though it was unclear if that concern figured in this case.

The nature of the disagreement itself remained under dispute.

Starnes told AFP the conflict arose after the 100 employees asked to be laid off and receive severance packages like their 30 colleagues were given.

For long-time workers at the plant, which opened 10 years ago, the compensation could amount to a year's wages.

On Wednesday Starnes said he had decided to offer such compensation, but that other issues remain to be sorted out, from payment technicalities to the fate of factory machinery.

He said: "I'm paying severances for people who already have jobs to get them to go back to work."

But the state news agency Xinhua, citing the district government, reported on Tuesday that the workers were demanding two months' unpaid wages.

Chu Lixiang, an official with the district labour union, told AFP on Wednesday that negotiations were ongoing, without elaborating.

Taiwan's Hon Hai Precision said Wednesday it plans to spin off some units as its founder unveiled measures to battle global sluggishness and falling share prices.

Hon Hai, the parent company of Foxconn group, saw its sales in the three months to March fall 19 percent from a year earlier to Tw$809 billion ($26.97 billion) as orders from its biggest client Apple slowed.

In reaction to the slowdown, a number of foreign institutional investors have ditched Hon Hai, with their shares falling from 48.06 percent to 40.22 percent since early this year. Hon Hai share prices dived from Tw$88.9 to a low of around Tw$70 last week.

But in a shareholders meeting, founder and chairman Terry Gou called on its investors to have faith in Hon Hai, the world's biggest electronics contract manufacturer.

"The recent sell-off is not triggered by our business outlook. There's nothing changed regarding our fundamentals," Gou said, adding that Hon Hai has been working to cut costs and diversify its businesses.

The conglomerate -- the world's largest maker of computer components -- assembles products for Apple, Sony and Nokia.

Gou said he plans to spin off some companies out of the 26 ones controlled by Hon Hai, including the unit that produces connectors -- a device for joining electrical circuits together.

"Some of our parts and components manufacturing companies are very competitive, they are definitely world class. Their genuine value is not found by many under the present circumstances," he said.

"This is part of Hon Hai's organisation restructuring efforts."

With the structural adjustment measures, Gou said now he can pledge to investors that "Hon Hai's profits in 2013 will go beyond that of last year."

Last week the firm announced it aims to hire up to 3,000 new employees to develop devices and software for Mozilla's Firefox operating system as it seeks to diversify from its core manufacturing services.

Gou also mentioned that a tie-up mooted last year with struggling Japanese electronics giant Sharp was still on the cards, though Hon Hai was in no rush to seal the deal.

"The deal with Sharp is still alive. The biggest problem is that the past year, their chief negotiator has changed four times. What can we do about that? But we're in no rush, the time is on our side," he said.

Hon Hai's net profit surged 16.14 percent to Tw$94.76 billion in 2012 while revenues rose 13.11 percent year-on-year to Tw$3.9 trillion.


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