HP’s $1 Billion Singapore Investment Draws Ire

Officials at Hewlett-Packard Wednesday announced a five-year, $1 billion investment to its manufacturing operations in Singapore that is attracting some heavy criticism.

The move, according to the computer and printer maker, is to provide more production capabilities to meet the growing demand from Asia-Pacific countries for high-end servers and printers, according to news reports.

HP officials were not immediately available for contact on the effect this would have on American jobs or facilities.

The Asia-Pacific region — which encompasses IT-hungry South Korea, Japan, and China — is currently a hotspot for computer software and hardware. According to research at IDC, a technology research firm with offices in Singapore, HP is the second-largest PC maker in the region, ahead of competitors IBM and Dell but well behind Chinese PC manufacturer Legend.

The Palo Alto, Calif., company also enjoys an expanded market share in the region, up from 8.2 percent in the third quarter of 2002 to 9.8 percent in the same quarter of 2003.

To cut down on the costs associated with shipping U.S.-manufactured hardware overseas and by extension the price tag, officials plan to expand its existing manufacturing plants and build new ones in Singapore.

Not everyone’s happy about the investment, however. Margaret Bartley, the technology chair of the Washington Alliance of Technology Workers, said the timing on the announcement couldn’t be worse, coming two days after Carly Fiorina, HP chairman and chief executive officer, was quoted as saying high-tech industries need more U.S. taxpayer support for research and development.

“My observation when I read that was what good is it going to do for us to spend taxpayer money on research and development when she is going to give jobs to Singapore and India?” Bartley told internetnews.com. “Any U.S. company asking for taxpayer support for their basic infrastructure has to turn around and provide some support to the U.S. economy and give us back something for our dollar.”

IDC researchers expect Asian tech spending to increase in 2004, as companies in the Asia-Pacific region recover from the SARS-induced freeze that affected many countries.

“With SARS now behind us, we can expect normal purchase patterns to resume,” said Bryan Ma, IDC Asia/Pacific senior research manager for personal systems, in an October report. “In fact, further growth is expected in the upcoming quarters due to the rapidly approaching year-end holidays as well as a gradual improvement in the regional economy next year.”

It’s likely the substantial investment will rekindle fears within the IT industry of a massive migration out of the U.S. by software and hardware manufacturers. Because of the low labor costs associated with Asian production in countries like Singapore and Malaysia, companies like Dell, HP and IBM have been bolstering their foreign production numbers.

It’s become widespread enough to touch off Congressional inquires and an initial round of legislation, like the American Manufacturing Jobs Retention Act of 2003, sponsored by Rep. James Walsh (R-NY). It calls for any company with 10 percent of its contracts coming from the U.S. government to have at least 50 percent of its work force in the U.S.

Speaking before the U.S. House of Representatives Oct. 20, Harris Miller, president of trade organization Information Technology Association of America, said the concerns were largely overblown.

“In statistical terms, the trend towards offshore outsourcing is a cloud on the horizon, not a hurricane sweeping everything in its midst… I say this because over 10 million Americans earn their living in the IT workforce,” he told the Committee on Small Business. “Nine out of ten of these workers are employed by businesses outside of the IT industry — banks, law firms, factories, stores, and the like.”

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