Compal may restart production in Vietnam to circumvent tariffs

Posted on Friday, September 28 2018 @ 9:57 CEST by Thomas De Maesschalck
In an effort to minimize the impact from the trade war between the US and China, contract laptop manufacturer Compal is looking at the option of restarting production in Vietnam. President and CEO Martin Wong said it would take 4 to 6 months to fully reactivate the assembly lines it has in Vietnam. These production facilities were established in November 2007, but were abandoned in 2013 due to supply chain issues and labor management difficulties.
Compal will be able to fully reactivate its plants in Vietnam in 4-6 months, said Wong. When asked whether the company's clients would be willing to absorb the costs for the production relocation, Wong said that the clients will eventually need to make a decision amid the prospect of a 25% tariff from the US.

With the US government having placed a 10% tariff on many imported goods from China and planning to raise the tax to 25% in 2019, most Taiwan-based supply chain players have been actively adjusting their production lines in response to their clients' requests recently. In addition to Compal, Quanta and Wistron have also been reportedly adjusting their production.
Moving production to Vietnam would be the best option for the firm in terms of speed, but supply chain support will remain a major issue. The other alternative is a move back to Taiwan, that would increase production costs by 3 percent. Compal is also investigating the Philippines as a potential location for new production lines.




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