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Hewlett Packard: Competing with the Celtic and Asian Tigers


November 9, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

Hewlett Packard Puerto Rico Co., in Aguadilla, has proudly become the world’s sole authorized manufacturer of the company’s ink jet cartridges. To achieve this eminent position, it had to double its monthly local production to 16 million of the new 2.0 series cartridges.

"We are devoting ourselves to ensure the success of the new series and to develop extensions of these products," said Iris Santos, Hewlett Packard (HP)’s vice president and general manager of the manufacturing products division of the ink jet cartridge plant.

Santos shares the leadership of HP’s manufacturing operations with president Lucy Crespo, general manager of the computing systems division and recently elected Puerto Rico Manufacturers Association president.

The Aguadilla plant created an extension of the 2.0 series–the Stubby–a printer compatible with Web television. "This means that you can use your television as a computer and have a very nice printer–thanks to the design from the Puerto Rican team." The Stubby will be launched this month in the stateside market.

Planning ahead, the local plant, in conjunction with headquarters, is working on a second generation Stubby to be marketed for web printing.

Three HP plants, Aguadilla, San Diego, Calif., and Boise, Idaho, have combined their talents and designed a cartridge for the transaction printing market–receipts printed at stores after purchase. Santos said the product came out this year and has been so well received that it is expected to surpass one million cartridges for first year sales.

Why has Puerto Rico become the world’s ink jet cartridge supplier? "Puerto Rico competes favorably with Ireland and Singapore in terms of tax incentives. All three HP manufacturing plants in these countries are controlled foreign corporations," said Santos, who began working 20 years ago at HP, when the plant had just opened and had 100 employees.

Santos said Singapore has a notable advantage over Puerto Rico. It offers hefty incentives to pioneer status companies–defined as a company that transfers new technology to the country. Part of the $47 million research and development (R&D) grant given to HP by the Puerto Rico Industrial Development Co., under its science and technology initiative, will be used to develop product extensions, she added. These are existing products that can be developed to serve other purposes.

The success of Aguadilla’s HP plant has not been a coincidence. "In addition to our location, which gives us direct access to the stateside market, and our tax advantages, my staff and I decided long ago to specialize in finding solutions and alternatives to extend the life of existing HP products," Santos said.

Over the years, Santos has developed a close relationship with HP’s San Diego plant, which specializes in developing special printing solutions. Santos oversees 170 employees at the Boise plant, which still manufactures the first generation of ink jet cartridges, series 1.0.

"Puerto Rico’s labor force is the best. It’s very skilled, much better than Ireland’s and Singapore’s. This gives Puerto Rico an advantage," she said.

Because Santos must travel regularly to both Singapore and Ireland to meet with her counterparts, she has had the opportunity to compare both countries to Puerto Rico. "The Irish government is very aggressive in promoting their country. It offers good incentives per job created and for infrastructure investments," she said. The Emerald Isle’s government does not have the same degree of involvement in manufacturing that Singapore has, according to her. Nor do they have Puerto Rico’s highly educated and skilled labor force.

Exchanging information is crucial among HP’s ink jet manufacturing plants in Ireland, Singapore, and Aguadilla. That is why the three plant managers and their corporate boss meet every three months at one of the sites. In February 2001, the group will meet in Puerto Rico. "The company measures all three in how effective we are in adopting changes for product improvement, be it cost, quality or volume. They also judge us in how well we communicate among ourselves."

Interchanges among plants are not limited only to the top management team, but include technical staff and production workers. There are 80 production workers and 20 engineers from Aguadilla at HP’s headquarters in Corvalis, Oregon. The local team is helping install new production lines.

Singapore and Ireland are also sites where technical, supervisory and engineering staffers go "to benchmark, exchange ideas and learn." Santos said the Far East trips are especially grueling, involving 24-to-30-hour flights each way for a four-day stay. "I accumulate a lot of mileage… when I take a few days off I prefer to stay in Puerto Rico and relax at home."

Puerto Rico’s advantage is its well-deserved reputation for quality manufacturing. "Research and development is a focal point for us at HP, and it should also be for Puerto Rico. The government has been moving in that direction in the last few years," Santos said. According to her, in recent years, the manufacturing sector is working closer with the government to change its perspective. Like other plant managers, her main concern is meeting infrastructure needs–water, electricity, roads or airports.

"Singapore is our real competition, not Ireland," Santos said. She explained that the Singapore government is very supportive of industry sectors that are falling behind, or suffering due to world market conditions. For one, the Singapore government immediately retrains personnel if the plant closes, so they can find employment in other industries. "We can’t say that Puerto Rico has achieved that level of involvement, but at least the government is working closely with the industrial sector to identify the problems."

Puerto Rico lacks coordination between the government and industry, according to Santos. She added that "we know what we have to do but we don’t move fast enough. There’s a lot of good intentions but the government must be more agile." As far as the plant managers are concerned, Santos said, "We have to ‘partner up.’ We must be more engaged and pro-active in seeking solutions and working with the government."

"You can roll up and die but you’re responsible for the people that work for you, and for future generations," Santos said. "The stress, the long trips, maybe it’s not worth it. However, I have a five-year-old grandson and knowing that he’ll be able to work at a place like HP–that I have contributed to make that possible– that’s worth everything."

This Caribbean Business article appears courtesy of Casiano Communications.
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