NetGear threatens to pull out of HK due to cargo crisis
- 20 July, 1998 13:52
Some high tech corporate citizens are threatening to bail out of Hong Kong within a few days if the cargo crisis doesn't end at Chek Lap Kok airport.
"If the cargo problems go on for another week, we are out of there," warned Patrick Lo, vice president and general manager of Netgear, a subsidiary of Bay Networks.
"Samsung, Motorola, everybody is jumping up and down because of the problem."
Netgear needs the troubled new $A120 billion airport to plug the production line from its nearby manufacturing plant into the world distribution chain.
At the moment, it must bypass the airport's frozen cargo handling systems by using its own trucks to shuttle product from its plant north of Hong Kong into chartered jets at the airport. The freight is then flown to Singapore for distribution to other locations.
With freight forwarders charging nearly $A5 a kilo, that's a cripplingly expensive exercise for NetGear which ships tonnes of product annually out of Hong Kong.
NetGear can't pass the extra costs down the distribution chain and its tolerance for continuing to absorb them is measured in days, not weeks, Lo said.
Singapore and Taiwan are the two most likely countries for NetGear to relocate its air terminal facilities.
If forced to abandon Chek Lap Kok, it will ship its hubs and switches by sea to one of those locations. However the viability of the manufacturing plant itself will be under threat if the cargo crisis goes on for months because incoming supplies are also being choked, Lo said.
"We rely on air freight to bring in components such as chipsets. At the moment, we are improvising by hand-carrying chips in using couriers but that can't go on."