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January 8, 2009 Thursday
Updated
Jan 8, 2009
Plunging exports hit Taiwan
Taiwan haunted by plunging exports, job cuts
TAIPEI - MR CHEN, a pilot for one of Taiwan's top air cargo firms, is getting to know his children much better as the export-dependent economy suffers its worst slump ever.

His time in the air has dropped by two-thirds from two or three years ago. He now has around 12 days off a month, double what he got just a year ago.

Chen's prospects are hardly likely to improve after Taiwan on Wednesday announced exports plunged a record 42 per cent in December from a year ago amid the worst global downturn since the Great Depression.

'I'm spending a lot more time with my kids,' said Mr Chen, 40, speaking on condition his full name not be used, before leaving to take his son and daughter to school on Thursday morning.

Taiwan's economic slowdown has snowballed with alarming speed. Exports, which were still growing by double-digits as recently as August, have tumbled in the past few months.

Meanwhile, the jobless rate has jumped to a five-year high, with many workers becoming semi-employed as manufacturers force staff to take unpaid leave for up to three days a week.

The numbers could be the canary in the coal mine for other export-dependent Asian economies like Japan, South Korea and China, which are already showing similar signs of weakness.

'It's a warning for other countries,' said Mr Tine Olsen, an economist at Moody's. 'Taiwan does announce the trade figures earlier than the other economies. The others lag. So I think December will be a bad trade month for all the economies.'

Long winter
The mood has grown sombre in Taiwan, maker of more than two-thirds of the world's laptop PCs and made-to-order microchips for the likes of global titans such as PC leaders Hewlett-Packard and Dell and chip giants like Texas Instruments and Qualcomm.

Electronics exports fell by an annual 43.4 per cent in December, also a record drop.

Compal Electronics, Taiwan's second biggest contract laptop computer maker, saw its laptop shipments drop from the third quarter to the fourth, an unprecedented dip for the company, said spokesman Chang Chih-ming.

'We're not sure how much longer this winter will last,' he said. 'More than 90 per cent of what we manufacture is made for export. To deal with falling demand, we're obviously keeping costs in check.' On the logistics side of the aisle, the shipping complex at Keelung, Taiwan's No. 2 port, was quieter than usual on Thursday.

A holding area for brightly coloured, massive containers with names like Triton and Capital was stacked only half as high as usual, said worker Tseng Tsung-peng.

He said many containers that would normally be stacked at the port have been moved to another area for repairs during their increasingly extended downtime.

'Manufacturing has dropped and there are no more export orders, which has a ripple effect,' said Mr Tseng, adding the downturn is the worst he's ever seen. 'We used to be full, there used to be work around the clock.'

Mr Yang Ming Marine, Taiwan's No. 2 marine shipper, was also downbeat. The firm expects global shipping to stay depressed through 2011 and plans to remove 10 ships from its fleet of 93 vessels due to falling demand, said Mr Winsor Huang, vice-president of corporate planning.

'We are also asking for lower rates at ports,' he said.

Silent victims
As companies struggle to cut costs, export-related workers like pilot Chen are becoming the downturn's silent victims, often left out of official numbers as their companies quietly force them to take time off without pay until times improve.

According to a report this week from Taiwan's Council of Labour Affairs, almost a fifth of Taiwan's firms with 200 workers or more have put employees on some form of forced unpaid leave.

Those include two of the island's biggest corporate names, contract chipmakers TSMC and UMC, which recently rolled out programmes requiring workers to take off four days a month without pay.

'Of course the workers are afraid,' said Mr Lee Chao-ping, chairman of the Federation of Aviation Employees of the Republic of China, Taiwan's formal name.

'First fuel prices went up, and now we have the global financial tsunami. So it's been very tough.' -- REUTERS

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