First Sumiden Circuits Inc. (FSCI)AS they say on Facebook, “it’s complicated”—sort of—but did you know that the laptop or smartphone you use to access your favorite social networking site or even read Lopezlink.ph may just have a bit of the Lopez Group in it? The key is the flexible printed circuits (FPC), those small, lightweight wiring components with electronic circuits printed on a flexible film that are used in today’s must-have devices and gadgets, including cameras, cell phones and music players.

First Sumiden Circuits Inc. (FSCI) has churned out millions upon millions of these FPCs from its corner of the sprawling Light Industry and Science Park (LISP) 1 in Cabuyao, Laguna since it went full blast with its manufacturing operations in June 1997.

LopezLink recently had a chance to see up close and personal how FSCI’s 1,518-strong pool of operators prepare the FPCs. Donned in masks and protective clothing, managers Aleth Pablo and Lowell Cabaluna took us through the FPC assembly line. As white-suited workers scurried busily around us, the managers dished out a crash course on how the raw materials, base material, dry film and, on occasion, backing films are transformed into the magical stuff through an exacting process.

FSCI, the country’s pioneering FPC manufacturer, is a joint venture among First Philippine Holdings Corp., Sumitomo Electric Industries Ltd., and Sumitomo Corp. The “First” in the company’s official name comes from FPHC, Sumi is from Sumitomo and Den comes from denki, the Japanese word for “electric.” In an interview with LopezLink, SVP for Quality Assurance/ Engineering/Finance and Administration Tim Batac said the company’s vision statement is “to become a world’s leading flexible printed circuits manufacturer” and mission statement is “to contribute to shareholders value by providing the lowest cost, best quality and fastest delivery time in the market.”

Batac, a mechanical engineer, has 29 years of solid industry experience covering various aspects of electronics operation through stints in Amkor, Dyne-Sem Electronics Corp., and Euro-Technology, S.A. in Madrid, Spain. He joined FSCI in 2006.First Sumiden Circuits Inc. (FSCI)
Turning over his company ID, the SVP showed off a small card. As in parent firm Sumitomo, FSCI employees carry on their person a card that includes the company’s seven corporate values—customer satisfaction, ownership and commitment, discipline, teamwork, integrity, continuous improvement, and respect for each other.

“We disseminate the vision, mission and values to all our employees with this card, and we have a monthly renewal commitment with a representative group from manufacturing and all the administrative staff. That way it doesn’t stay on the board and people get reminded that’s the reason for our existence in First Sumiden,” Batac said.

FSCI was one of 2009’s rare and unexpected success stories given that the global electronics industry had then fallen into one of its periodic but extra deep troughs.

“Basically we focused on our cost, on the ability of our people to produce more at less cost. At the same time, on the marketing side, we tried to secure our sales,” recalled Roy Baldo, SVP for manufacturing. “First Sumiden was thus able to weather the storm, making a profit of around $2.45M NIAT. It’s a big turnaround from an expected loss of $2.47M.” Baldo, also a mechanical engineer and one of the pioneering members of the FSCI start-up team in 1996, oversees the entire manufacturing operation, including the production planning group and equipment maintenance.

“It’s really the fruit of what we consider the effect of the implementation of the Balanced Scorecard. As a result, it was very clear to everybody what the strategy of the company is,” Batac said.First Sumiden Circuits Inc. (FSCI)
The Balanced Scorecard strategic management tool, which first gained popularity in the 1990s, offers an effective approach to successful alignment of an organizations goals as well as strategy execution. It was one of the innovations brought to the company by First Philec Solar Corporation president Dan Lachica when he was still FSCI president, and Roy Baldo.

“With the Balanced Scorecard, efforts are translated into results. If you don’t get results, you don’t perform,” Batac explained. “The organization had to accept that change first and then came up with practical measures relevant to each individual, and easily measurable. That’s really the hard part about the BSC.”

The tool was introduced initially only among the top-level management. “As we went on, we were able to deploy that down the line, to the division, department, down to the operators. Right now it’s something that’s complete, down to the operator’s level,” Baldo added.

According to Batac, they introduced FSCI’s latest BSC milestone also in 2009. “What we’ve done is, we’ve split the merit increase into the normal merit increases, that’s annual, and a performancebased incentive which is a quarterly measure. Every quarter there’s a translation of your performance. So it becomes very close to the heart of the people, they’re very conscious of their performance. They ask, ‘How did I do, how did I do?’ So that’s already down to that level in terms of tying up performance through incentives.”

With the BSC in place, FSCI was able to weather 2009 when It was one of the innovations brought to the company by First Philec Solar Corporation president Dan Lachica when he was still FSCI president, and Roy Baldo.

“With the Balanced Scorecard, efforts are translated into results. If you don’t get results, you don’t perform,” Batac explained. “The organization had to accept that change first and then came up with practical measures relevant to each individual, and easily measurable. That’s really the hard part about the BSC.”

First Sumiden Circuits Inc. (FSCIThe tool was introduced initially only among the top-level management. “As we went on, we were able to deploy that down the line, to the division, department, down to the operators. Right now it’s something that’s complete, down to the operator’s level,” Baldo added. According to Batac, they introduced FSCI’s latest BSC milestone also in 2009. “What we’ve done is, we’ve split the merit increase into the normal merit increases, that’s annual, and a performancebased incentive which is a quarterly measure. Every quarter there’s a translation of your performance. So it becomes very close to the heart of the people, they’re very conscious of their performance. They ask, ‘How did I do, how did I do?’ So that’s already down to that level in terms of tying up performance through incentives.”

With the BSC in place, FSCI was able to weather 2009 when suppliers were dropped like hot potatoes amidst a shrinking market. Clients opted to retain FSCI as a major supplier. “When we called everybody’s attention to the need for more cost reductions, more than what we were already doing as a team, the people responded immediately. And because the Balanced Scorecard was there, and their performance was tied to the scorecard, it was very clear to them. Their response came naturally,” Batac recalled. H e added: “We also owe it to our focus not just on the financial perspective but also on customer perspective and all of our processes. By the time 2009 came in, our processes were ready to face the crunch, the systems were in place.”

Nevertheless, the SVPs remain circumspect about FSCI’s fortunes in the next few years. Theirs is an industry, after all, that continuously throws curveballs and where the competition only gets tougher and tougher. “This industry used to be dominated by the Japanese. Now, the Koreans and the Chinese are already within the top 10 companies of the industry. Because they’re new, they really pull down the prices. That presents a big challenge to us because for the same sales, we have to produce 30% more units. So we continuously invest, we continuously train people, we continuously expand our operations to become competitive,” Batac said. “Our advantage is our service, how fast we respond and how well we do the things we do. That’s our value proposition speed and flexibility in responding to issues. Also, in terms of delivering the goods, we’re faster than the competition,” Baldo added.

One asset that without a doubt gives FSCI a big edge over competitors, with their lower labor and electricity costs and what have you, is their people. “Their sense of ownership and responsibility is something that FSCI can be proud of. Their consciousness to own up to the things that they do and to always think of ways to do things better because of their empathy with the company, towards achieving its objectives, I think that’s really the advantage that we have,” Batac pointed out.

This pride and generosity also extends to contractual workers, who would go so far as to ask to be assigned to FSCI instead of to other clients. “Here, the contractuals also share in the bonuses. We might be the only company that’s doing that but we treasure and give importance to their contribution. If you have 20% to 30% of your headcount that are contractuals, that’s a big chunk that’s contributing to the total results of the company,” Batac noted.

As if to dispel the notion that working for them is a walk in the park, he quickly added: “We’re very strict, actually. This is a very stressful company. If you talk to people, they’d say that. But if you develop the culture, you develop the personality, then you also bring that culture to your home.” “We just treat our employees fairly. If they do well, we reward them. If they don’t, then we do the necessary appropriate corrective measures. I think that’s what the people see, that we are fair to them,” Baldo added. “We have a lot of former employees who came from First Sumiden and then worked for another company…” “Some of them come back,” Batac finished, smiling.