China manufacturing: Stanley Black & Decker shuts Shenzhen factory as costs soar
- Sudden closure after 25 years in the community reflects Shenzhen’s transition from manufacturing base to technology hub
- Immediately after the announcement, human resource managers and labour agents swarmed the site to recruit laid-off workers to join other factories in the area
The Shenzhen factory of Stanley Black & Decker, a major US tool and household hardware maker, has closed up shop and laid off all of its 1,000 workers after 25 years of operations – reflecting the changing business environment in the world’s second-biggest economy.
Last week’s closure of the American company’s wholly-owned China unit, Stanley Black & Decker Precision Manufacturing (Shenzhen), marked the latest retreat by a manufacturing business from Shenzhen amid rising labour and land costs in the booming town just across the mainland border from Hong Kong.
According to a corporate notice dated October 26, the company’s management attributed the closure to “changes in the overall market environment and growing competition”.
During a Post visit last week to the factory in the Chiaphua Industrial Estate of the Shiyan community –a manufacturing base in Shenzhen that is increasingly being surrounded by property development – the entrance was swarming with human resource managers and labour agents who were trying to persuade laid-off workers from the closed factory to join other ones.
One long-time worker from the campus said she and other workers were caught off guard by the sudden decision.
“We had been busy since May, as there were big orders to fill,” she said, declining to be named but adding that she had worked in the factory for the last decade. “Most of us had worked overtime and earned at least 5,000 yuan (US$746) monthly in the past few months.”
Local media reported that the company has offered generous redundancy packages to its workers. Emails to Stanley Black & Decker seeking comment have gone unanswered.
The worker confirmed that many private electronics factories were trying to recruit laid-off workers at the factory’s gate, but she said most recruiters were not offering pay and welfare benefits comparable to what she and her colleagues were receiving.
Another employee at the factory gate, who also declined to be named, speculated that the upcoming expiration of the company’s land lease could have been a factor in the closure. Land lease prices have been surging in Shenzhen due to limited supply.
“Some of us guessed that the factory’s days were numbered, as the land lease would expire next February,” she said. “The Shenzhen factory focused on supplies to the US market, but in the past couple of years, we had been producing semi-finished products and shipping them to Vietnam’s plant for assembly.”
But the departure of Stanley Black & Decker Precision Manufacturing was even more surprising after the state-run Guangdong Television ran a report on the factory in September, pointing to it as a success story amid celebrations for the 40th anniversary of Shenzhen being named a special economic zone.
The report claimed that the company was planning to continue investing in automation and digitisation, with an aim of turning it into a “smart” factory by 2028.
Luo Jing, a production manager with a nearby exporting manufacturer of industrial moulds, said it was sad to see an industry bellwether leave, calling it a “model for the industry with its decent pay for workers and good working conditions”.
“It was well-known for years in Shiyan for its stable operations and solid performance,” Luo said.
For Alice Wang, a human resources manager from another factory trying to recruit workers who had been dismissed last week, the closure was hard to understand but potentially good news for her employer.
“Shenzhen factories are facing a sudden labour shortage … as many factories have orders pouring in and shifting from overseas,” Wang said.
There appeared to be relatively less anger among workers and the local community over the closure, unlike a decade ago when the relocation of the Stanley Black & Decker factory from one place in Shenzhen to another triggered a massive protest. According to the public figures, the factory’s payroll shrank from 1,778 in 2016 to 1,087 in 2019.
“It’s OK for an old factory to leave as long as there are new factories [taking its place],” said a hotel manager in the Shiyan area who declined to be identified. “We don’t worry much because Shenzhen is the best-developed city in China to attract investment.”
