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 user 2008-04-21 at 1:07:18 pm Views: 63
  • #19467

    Outsourced/Lexmark opens Philippine base
    company executive told the Philippine media at the celebration that the
    country’s operation now has just as many employees as the corporate
    headquarters. And it’s hiring 300 to 400 more people over the next few
    years.He also said the company can now build a product from beginning
    to end at the site, a process that was once the primary domain of the
    company’s armada of highly paid engineers and scientists in
    Lexington.”If you’re in Lexington, you’ve got to be nervous,” said
    Larry Jamieson of industry tracker Lyra Research. “Every other major
    company is moving more and more stuff offshore into wherever they can
    get the cheaper labor. Is it going to be the same company? Who knows?”

    ‘A global company’
    years ago moved the majority of the manufacturing of its printers and
    ink cartridges — some of which were once produced in Lexington –
    outside the United States.Within the past two years, it has closed an
    inkjet cartridge plant in Scotland to focus more of its manufacturing
    in lower-wage countries. Some of Lexmark’s support functions such as
    finance and accounting have also gone overseas.But Lexington has
    continued to be the site of research and development of new
    technology.In a statement, the company told the Herald-Leader it hired
    more than 150 new research and development employees in Lexington last
    year, “and the company plans to continue to add R&D resources in
    the U.S. in 2008.”Those moves resulted in a net gain in Lexington’s
    R&D positions, the company said. Overall employment in the city,
    though, did not grow substantially as the company eliminated 200
    positions in support areas, sending some of them to lower-cost

    Company executives declined requests for an interview.
    years ago, in advance of the company’s 15th anniversary, CEO Paul
    Curlander told the Herald-Leader that U.S. research efforts remained
    critical to the company. He said at the time that the company’s goal
    was to move things currently being done in Lexington to other locations
    so “we can then use the resources in Lexington to do more technology,
    more innovation work, which we think is kind of the core strength of
    the company.”He emphasized then as the company did in its current
    statement that Lexmark has to remain cost-competitive with
    rivals.”Lexmark is a global company. We sell our products globally. We
    manufacture our products globally. We design our products globally,”
    the statement read. “And we compete against other global manufacturers.
    But we also remain committed to our presence in the Lexington

    But at the grand opening of the Philippine facility
    earlier this month, Lexmark executives played up the fact that they can
    do all the R&D there.Chris Burdette, general manager of
    Lexmark’s hardware development, told the Sun Star newspaper in the
    Philippines that the facility there “can do everything” that Lexington
    does.”We can develop a product here from start to finish,” he told the
    paper.The company has done R&D in the Philippines for some time,
    using leased space, but, as executives noted at the celebration, the
    new plaza shows it is committed to the Philippines for decades to
    come.And the plans to grow show in the equipment at the facility. The
    R&D center has an acoustics chamber to test printer noise, as well
    as a lab that examines electromagnetic waves emitted by printers to
    make sure they meet international standards. That’s a first for the
    Philippines, Lexmark told the newspaper. Both are also in the company’s
    vast complex off New Circle Road at Newtown Pike.

    Burdette told
    the Sun Star that the printers that the company plans to build at the
    facility will be second-generation versions of ones developed in
    Lexington.Tom Carpenter, a vice president and senior equity analyst at
    Hilliard Lyons in Louisville, said companies should want to have
    R&D facilities in the geographic areas where they sell their
    products.And, as Jamieson said, many of those countries are in emerging
    markets that are growth areas for the printer industry, and locations
    there give them “a better understanding of what the emerging markets
    are looking for, instead of just sort of throwing in a cheaper version
    of the technology that they had in the mature markets.”Industry leader
    Hewlett-Packard is developing some of its low-end laser printers in
    China, he said, and some copier companies have outsourced their design
    for low-end products to companies in China and Taiwan.

    And it’s also loads cheaper for Lexmark.
    reason why there’s so many people in the Philippines is they’re in a
    race against time to reduce their costs,” Carpenter said, specifically
    noting the company’s struggles with its inkjet printer division that
    has been dragging down performance since the latter half of 2005.”If
    inkjet remains viable, the rate of job loss can slow. If it doesn’t,
    the process could accelerate,” he said.

    Two restructuring plans
    since 2006 have seen 400 administrative and sales support jobs either
    eliminated in Lexington or moved to lower-wage countries.The
    company also has seen some of its top managers leave over the past
    year, some heading to competitors and others moving to different
    industries. Few agreed to talk, but one marketing employee who left in
    2006 and later wound up at rival Kodak said he understood why some
    might be looking to leave Lexington.”The things they’re doing now …
    if they had been doing them, say, four years ago, they wouldn’t be in
    the hole they’re in today,” said Ben Smith.Lexmark bars its employees
    from speaking to the media.

    What’s next?
    Lexmark’s plans for
    domestic and foreign staffing aren’t obvious to those closely watching
    the company.”It’s hard to say whether they’re simply trying to expand
    their global footprint and reducing costs or they’re seeking some
    redundancy for a bigger change down the road,” Carpenter said of the
    facility in the Philippines. “They do have a lot of employees
    there.”Jamieson said Lexington’s future is likely to be secure, at
    least in the short term.”I’d be afraid to move everything to someplace
    like the Philippines until you know that things are going to work out
    right,” he said. “The last thing you need is for things to go wrong on
    your product. So I would think they would be running in tandem for
    quite a while.”But he did offer a prediction.”At some point, they’re
    going to say ‘we don’t need both facilities’ and they’ll go to the
    other guy.”

    Top employer?
    Lexmark was once hands-down the top
    private employer in Lexington, employing more than 5,500 in 1995. The
    company now employs about 3,000, putting it behind the Saint Joseph
    Health System, which employs 3,500. When independent contractors are
    factored in, the two have roughly the same number of workers.The
    printer-maker’s jobs are among the best paying in town. Lexmark jobs
    paid an average hourly wage of $40.86, according to data provided by
    the state Cabinet for Economic Development last year. That’s about
    $85,000 annually.