PHILIPS THAILAND: Supplying lighting to Asia and semiconductors to the world from its Thai base, company practises the 'Let's make it better' philosophy

Some things are beyond the power of businesses, even multinationals as large as Philips, to control. But recessions happen, and companies cannot wait for governments to solve their problems. That said, Philips Electronics (Thailand) believes the country is on the right path to recovery, with a strong consumer base that will revive quickly, according to Robert Martijnse, chairman and managing director.

‘We are part of a constant change process, which will go faster and faster....It requires top marketing skills to deal with the issues we’re facing in the marketplace’
ROBERT MARTIJINSE
Chairman, Philips Thailand

"Of course, we are concerned about the local situation, local market environment and conditions," he said. "But at the same time, we are constantly looking at making things better, product improvement, efficiency and cost improvements, and organisational re-engineering.

"We are in the process of continuous restructuring of the organisation to bring cost levels
down to business reality.

"Basically, this all means change. We are part of a constant change process, which will go faster and faster.... Thailand is indeed a very competitive market. Retail distribution is very aggressive. So it requires top marketing skills to deal with the issues we're facing in the marketplace."

The company's revenues, he noted, had fallen back to 1996 levels. "While the salary cost per head has gone up, the [profit] margin has not increased. Therefore, everybody in the organisation must constantly review their cost bases and efficiency of operations."

Amid the wave of redundancies among many large companies, Mr Martijnse said Philips
favoured a long-term commitment, given. The heavy investment it makes in training employees. Wherever possible, he said, the company tried to shift staff to other positions or locations.

"However, sometimes we cannot avoid laying off [staff]. However, we try to anticipate and plan as well as possible for long-term opportunities in the Thai market."

Philips was founded by Gerard Philips and his father Frederik in the Netherlands in 1891, with a tiny factory and 20 staff producing lightbulbs. Today, it is one of the world's largest industrial companies, among the top three in sales of consumer electronics, and ranked No. 32 on the Fortune 500.

It has 340 manufacturing plants in 46 countries, and sales and service outlets in 150. Its shares are listed on 16 stock exchanges in nine countries.

The group's 100 businesses vary from consumer electronics to domestic appliances, and from security systems to semiconductors. It claims top spot worldwide in lighting, colour picture tubes, electric shavers, coffer makers, dictation equipment, passive components and music production.

To give a few figures, Philips produces more than 2.4 billion incandescent lamps every year, and 30 million picture tubes. Each day its factories turn out 50 million integrated circuits.

Its research and development laboratoris in Europe, the United states and Asia employ 3,000 specialists. The R&D budget is nearly 7% of sales, far above the average for industries of its kind.

Philips began in Thailand in 1952. Today it produces a vast line of lighting products, domes-tic electrical and electronic goods, audio-visual equipment and professional products. Its manu-facturing and commercial operations employ some 5,000 people.

"In fact, Philips was in Thailand nearly 80 years ago before the company started official operations in 1952, basically focusing on manufactur-ing and selling lamps, in the local market Mr Martijnse said.

The local operation has seven marketing divisions: lighting products, audio and video, domestic appliances, consumer communications, business electronics, medical systems, and semiconductors and parts.

On the manufacturing side, the first lamp factory opened in 1960 to serve the growing domestic market. It has since grown into one of the largest lighting factories in Asia, an international production and supply centre located at Bang Poo industrial estate in Samut Prakan.

The company also has factories producing illumination and television sets at Bang Poo, and a large plant making semiconductors for export on Chaeng Wattana Road. From an after-sales ser-vice centre in Bang Na it provides centralised re-pair services as well as parts and accessories for both consumer and professional products.

"If you look back 40 years ago, basically all manufacturing was done for the local market," Mr Martijnse said. "Later, because of growing globalisation of products, opening of markets, re-moval of tariffs between countries, and efficiency drives in manufacturing, many electronics com-panies are restructuring into large global or re-gional operating and manufacturing units."

The fluorescent, illumination and semicon-ductor factories in Thailand are and example of international production centres, meeting re-gional lighting demand and global semiconductor demand.

Mr Martijnse said Philips, commitment to Thailand had made the company one of the country's largest corporate investors and one of its largest exporters.

Export sales account for about 80% of total turnover, while loca1 sales are expected to fall by 15 % this year due to the. sluggish local market.

"Semiconductor sales remain at approximately the same level as last year as far as the increase in the US dollar is concerned Lighting, due to our expansion of production last year, is still growing by about 40% compared to 1997."

With export sales holding good promise, total turnover for Philips Thailand should reach the 3 5 billion baht recorded in 1997, with 2 8 billion coming from exports.

Mr Martijnse was cautious about detailing the company's investment plans for the coming year, saying that the focus would be on enhancing production of lighting, colour n7and semiconduc-tor operations.

The commitment to quality is evident, though, in the standards Philips' Thai operations have attained. It was the first company in Thai-land to receive ISO 9000 recognition, and among the first in the world to receive ISO 14001 environmental systems accreditation. All of its facto-ries are now ISO 14001 certified.

Philips Electranics (Thailand) Ltd
Established: 1952
Main businesses: Lighting, household appliances, audio and video, business electronics, medical systems, consumer communication, semiconductors and components
Head office: Bang Na
Lamp and televisin factories: Bang Poo industrial estate, Samut Prakan
Philips Semiconductors (Thailand): Don Muang, Bangkok
Number of employees: 5,000
1997 gross revenue: 35 billion baht

Worldwide
Headquarters: Amsterdam
Number of countries: 60
Number of employees: 255,000
1997 consolidated sales: $34.5 billion