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Lack of engineers and slow production shift from China to Vietnam

For a long time, Vietnam has been considered the next major production base because the company hopes to diversify its supply chain to reduce its dependence on China. However, due to the continued SARS-CoV-2 outbreak in the region, strict border controls, and even local blockades, Apple, Google, Amazon and their contract manufacturers will face the problem of shifting production to Vietnam this year. However, there is a bigger problem: Vietnam does not have enough engineers.

For some time, large companies such as Apple and Asustek, as well as production partners such as Foxconn and Pegatron, have been working to transfer production from China to Vietnam because the world’s labor force has become more and more expensive.

After the United States began to impose punitive tariffs on Chinese-made equipment, these companies stepped up their efforts in 2018. According to the report, in fact, contract manufacturers of electronic products such as Foxconn and original equipment manufacturers (OEMs) such as Apple, Amazon, Dell and Microsoft have either established or expanded their operations in Vietnam. Nikkei.

(Image source: Apple)

But local factories and supply chains need training of local engineers and local workers. Obviously, Vietnam does not have enough local engineers to establish a new supply chain or cooperate with large suppliers to develop brand new products. In addition, travel restrictions prevented engineers from other countries from coming to Vietnam to launch new product lines. Essentially, Vietnam’s facilities can be used to manufacture products that have been mass-produced elsewhere, which greatly reduces Vietnam’s competitiveness.

“[Vietnam’s] A supply chain executive serving Apple and Google said in an interview with Nikkei that engineering labor is still far from enough. “Due to all travel restrictions, it is only feasible to produce products in Vietnam that have already been mass-produced elsewhere, rather than starting to produce upcoming products from scratch in the country.”

Apple

(Image source: Apple)

As one of the world’s largest suppliers of electronic products, Apple is one of the most cutting-edge suppliers that transfer part of its production to Vietnam. The company currently produces some AirPods series headphones in China, but most of them are still made in China. The company hopes to eventually produce 20% of AirPods in Vietnam, but the upcoming next-generation AirPods will begin production in China first.

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