Nations Of Notebooks

The Top of Mt. FIC

Tsiang's 12-mile drive to Linkou takes him through dreary, crowded industrial neighborhoods, up curving roads to the company's red-rimmed mountaintop plant. By any measurement, FIC is a large, successful company. It operates 11 factories and final-assembly centers worldwide. Its affiliation with Formosa Plastics, an $11 billion plastics empire, gives Tsiang substantial advantages. For example, the mountain on which FIC's plant is located is owned by Formosa Plastics. Roughly 300 foreign laborers, most from the Philippines, live here in spare dormitories and eat in the company cafeteria. Company-owned buses deliver another 1,200 employees each morning.

FIC's relationship with Formosa Plastics has also helped Tsiang find his way in the national supply chain. Taiwan, says Tsiang, is an economy of connections -- or Guanxi in Mandarin. In fact, five years ago, when Tsiang arrived in Taipei, the first thing he did was to identify the best purchasing people in FIC and, with them, call on hundreds of suppliers. "I visited everyone," Tsiang says. "I looked at their experience and quality. My key question was, Can they meet our standards?"

For all the resources at FIC's disposal, what distinguishes this company as Taiwanese is its attention to the same critical success factors as its smaller, less wealthy suppliers. FIC is just as passionate about speed, flexibility, cost cutting, and relentless customer service as the tiny mom-and-pop parts makers.

It's an attitude that Tsiang has wholeheartedly embraced, which is why he rarely works out of his impressive corner office in FIC's downtown Taipei headquarters. He prefers to be in Linkou, where his white-tiled office is decidedly un-CEO-like: the walls are bare, except for one whiteboard covered with unit shipment forecasts. He has an FIC housebrand notebook computer on a small, round conference table, and his unpretentious desk is covered with reports and updated analyses of the competition.

Just down the hall from Tsiang's office, in a small conference room, a group of 20 young FIC engineers sit around a long table with two visiting Texas Instruments engineers, plotting the trial run to take a new TI Extensa notebook into mass production. The schedule calls for the new 133 megahertz, Pentium-based, 1.3 gigabyte color notebook with built-in CD-ROM to go into production one month and debut in the market the next. Speed is everything: the entire process, from initial design to production, will take only six months.

These young, enthusiastic engineers -- the oldest is 33 -- work 80-hour weeks and earn as much as $3,000 per month, a figure that can double with year-end bonuses. They are paid to grapple with quicksilver technology, a product set that changes so rapidly it is impossible to hold. Here is where FIC's speed and flexibility are put to the test.

No sooner do the engineers design a box using Intel's 133 megahertz Pentium processor than Intel announces a 150 megahertz version. The market shifts, customers hold o/ buying, and inventories back up. Last year, CD-ROM drives running at twice the speed of music CD players were replaced as standard equipment by drives running four times as fast -- and then within months, six times. Screen sizes change, components go from scarcity to surplus, material costs fluctuate dramatically, throwing o/ pricing, upsetting inventories.

To handle this dynamic environment, three years ago Tsiang brought in a new manufacturing team lead by Michelle Hsieh, a young U.S.-trained engineer with a degree in electrical engineering from Taiwan University, to revamp completely the manufacturing operation. "There was a lot of resistance," Tsiang says. "Our manufacturing people had seen the notebook effort fail time and again, so they were just waiting for this one to be killed."

Hsieh, a diminutive, dark-haired 36-year-old, set up the first assembly line, altering what had been a desktop computer line to handle notebooks. In the modern, three-story factory, FIC builds both motherboards and notebook computers. The converted warehouse, with 20,000 square feet of space on each floor, epitomizes FIC's efficiency. Even the workforce is colorcoded: line workers wear yellow shirts, quality assurance engineers wear pink, and R&D engineers are in blue.

There are 350 workers building notebook computers, turning out 2,000 units per day. "We needed to improve quality, efficiency, and scheduling, which is a tough challenge when you have to work so cheaply," Hsieh says. Material costs drop an average of 6% every quarter -- LCD prices dropped from $500 to $400 in one month, for example -- and material shortages are a regular event, making forecasting nearly impossible.