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Intel Cavite Closing Down, for Real?

2:35 pm PHT

 Satellite image of Intel Philippines in Gen. Trias, Cavite.

Almost one year ago, Yuga raised the alarm that Intel might move their Cavite operations to Dalian, China. Well, it didn’t happen at that time. Also, when Intel announced last year that they will sell off their flash memory unit to form a new company called Numonyx, the closing fears circulated the rumor mill again since half of the operations at Intel Cavite was in the manufacturing of flash memory. Well, just yesterday, an internal announcement came that Intel Cavite might close off for good within the next six to nine months.

I got ahold of the leaked (?) info about Intel Philippines closing from the comments left by current and former Intel employees on my “Intel Philippines, Cavite Plant” article over at Vista Pinas. Here are some choice comments:

“Corporate made an announcement today about the closure, including how the separation of employees will be managed.” —JV, April 2
“many employees cried… too bad they had to close it down. the high costs of maintaining the site (i.e., high electricity bills, very high government taxes, building rentals, etc.) drove the closure.” —tuluk, April 3
“Yes, the plant will be closing down 6–9 months from now from what I have heard from those who decided to stay behind. […] The high taxes is not just the unbearable part but the other employees who abused the management and company, stealing microprocessors and selling them to the black market. Oh and yeah, electricity is not only causing them lot (being expensive and all) but causing them lost production time due to fluctuations.” —nie, April 3

Searching around the blogosphere, an Intel employee recounts in his LiveJournal blog that the “official” statement for the planned closure is:

“[Intel Philippines needs to] find another building so that structural abnormalities in CV1 [Cavite Plant 1] can be remedied else Intel will cease all future Manufacturing operations in the Philippines…”

If this is true, and I think it is (Numonyx officially became a company last March 31, 2008 making the timing extremely uncanny), it is a sad day for the Philippines as an investment site. Intel started its operations in the Philippines in 1974, a mere six years after Intel itself was founded, and after 34 years Intel will likely cease operations here having moved to places like Vietnam and China, which are apparently more manufacturing-friendly.

The Philippines needs to get its act together. Otherwise, the only thing we’ll ever be good at here for investment is call centers and business process outsourcing, which is not enough to keep jobs in the country.

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Comments

Comment times are in Philippine time (+0800).

1

On 4:17 p.m., 3 Apr 2008, yuga wrote:

Got confirmation from people inside Intel Cavite that this is for real. Twas an internal memo but the formal Corporate Announcement is yet to be released.

2

On 4:35 p.m., 3 Apr 2008, seav wrote:

@Yuga, at least now it’s more confirmed. While Intel only said that they might close down operations, I think it’s as good as done.

3

On 6:58 p.m., 3 Apr 2008, duo65 wrote:

Yes its true Intel management announced that it plans to close down the CV1 factory within 6 to 9 months. This announcement was made yesterday. The management staff also presented the amount of separation pay employees will receive based on their tenure with the company. Many employees are sad, but I think a greater number of them are happy because of the very nice separation package

4

On 9:09 p.m., 3 Apr 2008, Eyktoz wrote:

It’s sad due to stealing , one big company will close down. Shame on Filipinos who are stealing microprocessors…Marami ang nadamay ..

5

On 7:23 a.m., 4 Apr 2008, sun wrote:

@ Eykotz. That is not the real issue to the possible shutdown. You’re not doing justice to the workers in Intel CV by saying that they steal from Intel.

6

On 9:29 a.m., 4 Apr 2008, rycke wrote:

I’m temporarily limiting access to the blog URL posted above, for very obvious reasons that I hope you folks would understand. For those that have managed to read it thus far, I can assure you whatever it is that I said in there was true down to the last word.. And like I said, I comically “swear on my job” that I’m not fabricating details for details’ sake. But until the Corporate PR Group releases an official statement, we should not jump to any premature conclusions.

The complete story is that, and this has been extremely misrepresented in various circles thus far, there are issues with the current building where Intel CV is operating and given Intel’s utterly strict standards on safety and building code compliance, this is deemed more as a long-term move for safety reasons (think Hanjin and you know what I mean) rather than an immediate pull-out of busines operations. In order to sustain the business, a set of options have been formulated by Intel Corporation as a whole with the most promising being that a new building should be identified where all operations can be transferred to and resumed. This part of the story is still not resolved and a second announcement is due by end of June to finally roll-out the official plan, a full closure being one of the alternatives, if a building is not identified and the economic climate of the Philippines continue to be inferior versus Vietnam and China and the rest of the world.

The reason for the paranoia, if you can even call it that, is the Filipino’s negativism towards news such as this! I continue to remain optimistic as I have mentioned, but I am severely outnumbered by those who have already concluded that the site is done for good!

My request is to not spread unfounded rumors until we get the official version of the story, hence my choice to temporarily restrict access to that post (which is more personal than corporate in it’s tone and language).

I hope this helps in any way. _

8

On 10:04 a.m., 4 Apr 2008, rycke wrote:

I posted a clarification post as a response to the one I posted yesterday. The comments section doesn’t seem to accomodate direct URL links so if you want to check it out, go to rycke.livejournal and find the post entitled “As Official as Unofficial Gets”.

Thanks.

9

On 12:30 p.m., 4 Apr 2008, ong wrote:

i really hope it’s a “structural problem.” but why would intel management present an exit package for the employees in conjunction with the announcement?

10

On 2:56 p.m., 4 Apr 2008, hoo wrote:

It would be hard and costly to transfer to another building with all the machinery and tools. I think building transfer would be hard. Significant amounts of time, labor and money are needed to do this. And to do this in just about 6 or 9 months? It’s practically impossible.

11

On 2:57 p.m., 4 Apr 2008, hoo wrote:

It would be hard and costly to transfer to another building with all the machinery and tools. I think building transfer would be hard. Significant amounts of time, labor and money are needed to do this. And to do this in just about 6 or 9 months? It’s practically impossible.

12

On 4:03 p.m., 4 Apr 2008, rycke wrote:

On the compensation question, Intel has long planned to shutdown its microprocessor operations in the Philippines and some downsizing should be expected. With the structural issue being brough into light, this affects CV’s Chipsets business as well, which supposedly was expected to go on way after CPU has closed.

As for the roadblocks to transfer, I think the essential point is missed. Intel prides itself in its workforce and money is no object (consider new fabs and new factories) if Intel believes the Filipino workforce is worth keeping. The questions isn’t money, it’s the economic environment and the ease of finding a new location to which a transfer can be done with the least of problems. We do that, and we should be ok.

13

On 4:51 p.m., 4 Apr 2008, Omar wrote:

We should blame Gloria Arroyo for this. hehe

14

On 7:15 p.m., 4 Apr 2008, merly wrote:

ive been working at intel cavite philippines for 10 years now, and its very schocking on our part after hearing that in our management that it will be close in 6 to 9 months.. … to think the structural problem was mainly the reason ,not convincing talaga for us employees..ung main lobby newly furnished at soundproof pa….maybe ma con convince pa me about the separation package..hehehhe! 4 years mo sasahorin… but kidding aside its really very very sad….intel cavite is a part of my life na….and nothing’s compare with it… blame it again on GLORIA ARROYO..SOBRA LAKI NG TAXES NA KINUKUHA…huhuhu!!!!

15

On 5:06 a.m., 5 Apr 2008, pentium wrote:

There’s an on-going recession in the US right now. Latest news has it that US employers cut a surprisingly large 80,000 jobs in March, the biggest decline in employment in five years, a government report showed Friday.. Somehow, there has to be a connection to Intel’s downsizing.

16

On 8:06 a.m., 5 Apr 2008, Kevin wrote:

If Intel values its own workforce, then why the exodus of people and some freeze-hire for additional headcounts? Why are they letting these people go without any replacements? On the transfer of operations, I think the only transfer that will happen is site transfer to either China or Vietnam. Those countries offer more than what the Philippines could ever afford to offer.

17

On 1:49 a.m., 6 Apr 2008, stuff wrote:

Its really good how fast information and news transfer thru the internet. But using these information to jump on the a baseless conclusion is quit demeaning for those that will be affected on what other people write without first considering the effect of what they are writing. My APPEAL is that, for those who value their comments to be true please consider the effect of your figurative language before posting any baseless information. Most of us in Intel do have a family and to start a rumor stating something is wrong with us as Employee do affect our family. Most of us still value our pride that we have worked fairly for the sake of the company and we attain certain accomplishment that give us the additional satisfaction as professional workers. The closure of the site might have been due to multiple reason other than that of what is officially been released, the management deemed not to release them for their own reason. Regardless of all the remunerations it is still hard and very sad to accept that you have to lost your job, but it is still harder to hear that you were branded as something else by those who carelessly put their thought on how fast they can type on their keyboards. Each one of us as Filipino (same as those from other nation) WILL NOT accept that we are named as robbers because of a very few who fly their fleecing craft on the dark alley during the night.

18

On 10:26 a.m., 7 Apr 2008, serious-side-of-me wrote:

i agree with what SUN said…So sad that some people doesn’t think first before they say something about the issue. I feel the same way for a neighbor saying that we intel employees were thieves..i feel bad when i heard that..really. it hurts me.

19

On 2:58 p.m., 7 Apr 2008, archilles wrote:

It is sad that due to other employee who abuse the company even stealing of processor is one of the reason behind the closure. Even top executives of intel warn that if the stealing will continue they wont hesitate to close the company. I was one a employee of intel but i’m not honored to be a part of it.

20

On 4:12 p.m., 7 Apr 2008, blue wrote:

Its true that intel execs made an announcement about intel cv1 building closure in 6–9 months due to structural problem..partly, i beleiive that the announcement was true as i have heard of it two years ago from a third party facilities contractor that the building cannot withstand another 10 years of operation. Im working at intel main production floor and as i have notice , addtional braces(orange steel post) on cv 2nd floor assembly area were built to assist those shoring points..CV closure is just Intel’s COMMITMENT TO SAFETY..As an Intel employee i was so sad that the plant will close hence no any other building will be identified for the transfer..So sad because working at Intel is a pride as a Filipino because most intel processors had their start up runs at INTEL Philippines.. Losing my job is just secondary what hurts me most and I hope most Filipino Intel employee is the pride that we had contibuted to the world, our innovation and hardwork..Its true that a very attractive seperation package which will make many of us employee an instant millionaire but let us still keep in mind that its so sad to hear that there will be no more Intel Phillipines..

21

On 9:46 p.m., 7 Apr 2008, shukung wrote:

thonie, ikaw ba yan? hehehhhe.

22

On 2:19 p.m., 8 Apr 2008, butenga wrote:

ung magiging milyonaryo, ingat na lang kayo kay Recca. Hope magamit nyo ang pera nyo sa tama or else you wasted your years for nothing.

23

On 2:22 p.m., 8 Apr 2008, Shukung wrote:

Karamihan kasi sa mga Pilipino, marereklamo, mayayabang. Makikita rin yan sa ibang (hindi naman lahat) empleyado ng Intel. Sa cafeteria, sinisigawan nila yung mga service crew kapag umoorder sila o kaya kapag hindi nila gusto yung ulam. Nasa jeep pa lang at wala pa sa Intel, nakasabit na kaagad yung ID, akala mo mawawala sila… proud na proud sa ID nila. Kung manlait ng ibang tao, ganun na lang, kinikilatis pati hitsura. Pare-pareho lang naman silang mga emplyedo ng Intel. Lahat may karapatan na magtrabaho at hindi laitin ng ganun na lang. Ngayon, matatauhan na yung mga mayayabang na yun. Buti nga sa inyo.

24

On 10:31 p.m., 8 Apr 2008, kulafu wrote:

to shukung… engot ka pala, walang kinalaman yung pag close ng intel sa mga pinag sasabi mo.. stick to the issue man! dahil sinisigawan yung taga cafeteria, nakasuot agad ID sa jeep mag close na intel? hahahaha (using the voice of Simon Cowell) Shukung…. you wrote the worst comment on this site!  :) PEACE!

25

On 7:52 a.m., 9 Apr 2008, blue wrote:

Message from Brian Krzanich to Cavite employees

Cavite employees,

I first wanted to send my apologies for not being at the employee meetings on Wednesday and Thursday. On Wednesday morning, I wanted to visit the potential sites that had been identified at that point, to personally see them. Then, in the afternoon I had some meetings with government leaders to let them know of our issue, and also to let them know we were looking for options to identify another building, if at all possible. So I could not do these activities and make it to the site, as well. Just too much travel with the traffic.

I wanted to send you this note to assure you our search for other options to remain in the Philippines is truly an honest one, and we are expending a great deal of energy in this effort. On Wednesday while I was there, we were able to visit three different sites and buildings that are potentially available. One of them was clearly not usable but we continue to investigate the other two locations, as well as several others. We have a focused construction team which is going to be a part of our evaluations so that we can quickly determine if any of these locations is viable. I cant promise we will be successful. I can promise we are doing everything we can to identify a viable option.

I know that the communication last week was difficult and I apologize for that. I have always committed to you that we would communicate information as soon as we have it, and so we wanted to get with you as soon as we could as we identified the issues and need for improvements.

Mike, Robin, Steve, and I continue to meet three or more times a week to get updates on all of these efforts and to ensure were doing all that we can.

I promise on my next trip out I will spend time on the site so I can visit with you all. In the meantime, if you feel you have an idea or some thoughts you

want to share, you know you are always welcome to send me a note.

Brian Krzanich

Vice President General Manager, Manufacturing and Supply Chain Intel Corporation

26

On 7:29 a.m., 10 Apr 2008, guile wrote:

wag nyo na patulan yang si shukung na yan.

stick to the issue. intel is closing down —- and that’s it. the announcement before and the email above are meant to soften the blow. integrity of the building? c’mon! we’re to smart for that bulls*t. it’s an obvious excuse. the real reasons are high power rates, high taxes and the bleak economic outlook. think of it as a means for a graceful exit. after all, intel still wants to look clean in the papers and don’t want to add to the public outcry on power rates and taxes. they’d rather do business elsewhere than complain.

pinoy’s productivity and quality? get real! china, malaysia and vietnam offers better productivity and at par quality. lahat ng nakita kong microprocessors na binebenta dito sa pinas puro gawang malaysia at china. i know ’coz im familiar how to read lot numbers (the first few digits of the lot numbers will tell you which plant made it). bring this to the intel board and you’ll realize that money talks over there. sure they value our productivity and quality but when they see china and vietnam offering perks and juicy deals, they’d pack up and move there.

so, sa mga taga-intel, move on! don’t expect too much.

27

On 8:40 a.m., 10 Apr 2008, evie wrote:

sad to hear this news from friends, this news spread around the world so quickly, I heard it from my different former colleagues who are now spread all over the world. Let’s hope for a positive news from the management on the possibility to remain the Philippines, that they may resolve those safety issues and other concerns. I’ve work for Intel Phils for almost a decade, I know the management will not do such a drastic move and let the people down.

28

On 12:53 p.m., 10 Apr 2008, natzky wrote:

Im an ex intel also, spent almost 10 yrs of my professional life there. Really is very sad that it will wind down operations. Yung sinasabi na kesyo arogante at mayayabang taga intel, well meron pero majority are just earning their living. As i feared when vietnam AT was announced laking threat na nito sa CV. Tapos they announced na they are doubling its floor space. What will they do with all that capacity? They could certainly juggle their products anywhere. And virtual factory positioning is really a cut throat competition. So as a business youll surely go where u could maximiza ur profit. If u cant deliver then thats it. CV intellittes are a proud and brave bunch, they have always delivered and will still continue to deliver up to the end. I guess this is the last mighty big AR to complete  :)

29

On 3:46 p.m., 10 Apr 2008, lolo jose wrote:

All this boils down to former President Ramos’ drive to secure questionable IPP (Independent Power Producers) contracts which paved the way for an oversupply of electricity and, thus, very high power rates. Not only that, President Arroyo added to the burden of the Filipinos, while being indebted to Ramos, by carrying out Ramos’ unfinished business with the IPPs.

The link: http://www.pcij.org/stories/2002/ramos.html

30

On 12:24 p.m., 11 Apr 2008, Maldita wrote:

same here, an Ex-Intellite. though i have been an “Intel outside” person for 3 years already, i think the company’s values and integrity remained in me.

It’s depressing to hear different rumors about the alleged “closure”, I just wish that the “transfer” would happen, rather than shutting down a Prestigious company for good. Intel Phils i think is a legacy—and a pride for many people, something you can not imagine to vanish.

31

On 1:37 a.m., 12 Apr 2008, floridahatch wrote:

A lesson to learn that Job Security is really a BIG JOKE.

32

On 7:16 p.m., 12 Apr 2008, M.V.Martinez wrote:

Yep, the Philippines needs to get it’s act together. There are som many reasons for closure but I think it all boils down to how the government takes care of it’s investments and of course productive efficiency which doesn’t seem to happen anymore because they spend more maintaining than earning profits.

33

On 3:56 p.m., 2 May 2008, mike, formerly from intel CV1 wrote:

This is sad. Having worked for intel “FlipChip” on two occasions have been one of the defining moments of my life.

The second floor of CV1 holds alot of happy memories for me, having worked a whole 11 months for my OJT and for a few months a couple of years later in both assembly/test as an engineer. It does feel like one of those unshakable institutions in my life is going away.

To the those still “inside”, I do hope your leaders get the breaks they need to identify the new site. To those who posted who believe that we are not at par with China, Vietnam, or Malaysia. You are correct, intel Philippines holds FAR BETTER people than those countries will ever have, PERIOD.

Intel Philippines has survived the post year 2000 meltdown competing with these same sites just because intel Filipino employees fought and overdelivered on month on month productivity and factory output goals despite of zero hiring, the second highest electricity rates in asia and a high tax rate environment. IF there is any good REASON why intel would close down suddenly millions of dollars worth of equipment and throw away thousands of manhours in training. I would have to agree to the the one logical reason, it must be SAFETY.

34

This comment has been flushed out.

35

On 1:22 p.m., 4 Jun 2008, James wrote:

Dear Natzky,

I am doing some research, on Intel’s operations in the Philippines and elsewhere in Asia, and would like to interview some former employees of Intel.

Perhaps you can help me, in this regard ? please reply to me e-mail account: lookforjames@yahoo.com

Thanks

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