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Production and Business Scale of Esquel Vietnam Factory


3.1.3 Production and business scale of Esquel Vietnam factory

Currently, Tommy production at EAV accounts for 80%, while Nike only accounts for 20%. EAV's goal is to get more orders from Nike.

The following is a brief summary of some information related to production capacity, revenue and average income of employees at EAV from 2010 to present:

Table 3-1: EAV information summary table


Year

Output (units)

Revenue (USD)

Average income

- CN (VND)

Average income

- NV (VND)

2010

1,200,000

No number

whether

2,700,000

3,300,000

2011

2,400,000


3,500,000

4,500,000

2012

3,300,000


4,500,000

6,000,000

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Production and Business Scale of Esquel Vietnam Factory

(Data source: EAV)

3.2 Organizational structure chart

See Appendix 4

In general, the departments are divided quite clearly with specific functions. However, due to starting from a small scale, some departments are headed by one person. This is sometimes difficult to monitor and cross-check or some jobs overlap. Up to now, the number of employees has doubled since the beginning of joining Esquel Group, so in the near future (around the 4th quarter of 2012), the organizational structure will have some changes to make it more suitable. For example, merging workers in the Finishing department but located on each production line into the sewing department and managed by the sewing team leader, separating the import-export and warehouse departments from the Finance group with separate department heads.


3.3 Human resource situation at Esquel Vietnam in 2010 & 2011


3.3.1 Personnel structure

3.3.1.1 Division of personnel according to some basic criteria

See Appendix 5

Due to the nature of manual labor in the garment industry, there is always a large gap between men and women. Although, unlike other garment companies, EAV always prioritizes recruiting men, taking advantage of all skilled labor sources, at EAV, women account for 88%. The workforce is quite young, with an average age of 26, 50.2% are still single and 81.8% are from the 8X generation and above. The workforce at EAV is increasingly Vietnamized, meaning that from 1.25% of foreign workers before July 2010 to now, there is only 0.3%. The workforce at EAV is still very new. 18.7% are on probation or apprenticeship and nearly 82% have less than 2 years of seniority.

The education level of EAV workers is at an average level. High school level is about 50%; vocational secondary school, professional secondary school and college account for about 30% and university level is 20%. However, the education level of factory managers - the subjects directly managing workers - is worrying when only 8% have graduated from secondary school, college and university and also about 8% know how to use English. This is an important factor that has strongly affected the rate of job resignation and production quality in the recent past. That is the reason why in the near future, EAV will promote compulsory training programs for these subjects, focusing on technical training, soft skills and foreign languages.

3.3.1.2 Ratio of Workers and Employees in the Company


Table 3-2: Ratio of Workers & Employees at EAV


Monthly labor

T1

T2

T3

T4

T5

T6

T7

T8

T9

T10

T11

T12

688

602

715

735

763

741

748

766

682

715

714

710

52

47

49

52

54

56

55

58

86

92

91

100

740

649

764

787

817

797

803

824

768

807

805

810

710

906

1,043

1,007

977

941

971

1,087

1,093

1,182

1,251

1,237

122

120

135

141

146

151

151

160

208

210

214

202

832

1,026

1,178

1,148

1,123

1,092

1,122

1,247

1,301

1,392

1,465

1,439

1,137

1,249

1,273

1,271

1,286

1,290

1,291

1,250





194

209

204

197

210

211

212

229





1,331

1,458

1,477

1,468

1,496

1,501

1,503

1,479

0

0

0

0

Y2010 CN NV TC Y2011 TC NV CN Y2012 TC NV CN

(Data source: EAV)

Before joining Esquel Group, the Company had very limited office staff, mainly concentrated in factory management. Staff only accounted for about 6 to 7% of the total workforce. Since July 1, 20110, staff (including office staff and production management levels) has always accounted for 13 - 15%.


3.3.2 Turnover rate

3.3.2.1 Esquel Vietnam Employee Turnover Rate in 2010 & 2011 & First 5 Months of 2012

% Quit job

16.00%

Turnover Rate - Y2010

14.85%

14.00%


12.00%

11.30%

10.39%

10.00%

9.62% 9.46% 9.36%

8.98% 8.07%

9.71%

9.29%

8.00%

7.24%

6.00%


4.00%


2.00%


0.00%

1

2

3

4

5

6

7

8

9

10

11 12

Month


5.33%


Figure 3-1: EAV's turnover rate in 2010

(Data source: EAV)


% Quit job

25.00%

Turnover Rate - Y2011

21.51%

20.00%

18.30%

17.17%

16.42%

15.00%

12.82%

10.52%

10.00%

9.30% 9.29%

9.65%

7.17% 7.63%

6.96%

5.00%

0.00%

1

2

3

4

5

6

7

8

9

10

11

December



3.3.2.2 Analysis

Figure 3-2: Turnover rate at EAV in 2011

(Data source: EAV)

Just like other garment factories, the rate of job loss is always a nightmare for employers, especially during the period right before and after the Lunar New Year every year. The rate of job loss from February to May 2011 was much higher and more volatile than the same period in 2010 because the company was expanding production, so it had many recruitment strategies after Tet, so it was inevitable to recruit en masse, including workers who were not really suitable.


3.3.3 Brief assessment of the reasons for personnel changes of Esquel Vietnam employees in 2010 & 2011 & the first 5 months of 2012

3.3.3.1 Analysis of EAV employee turnover rate


Table 3-2: EAV Employee Turnover Rate


Year

1

2

3

4

5

6

7

8

9

10

11

12

TB

2010

5.79%

6.62%

9.29%

12.66%

6.97%

12.55%

8.88%

12.14%

6.98%

6.52%

6.59%

8.00%

8.58%

2011

2.49%

4.13%

10.98%

8.70%

6.27%

7.41%

3.31%

5.14%

7.44%

9.09%

3.77%

4.81%

6.13%

2012

7.09%

4.47%

10.17%

7.48%

2.39%








6.32%

(Data source: EAV) Over the years, the average turnover rate is similar (from 6.32% - 8.58%). In 2010 alone, it was quite high (8.58%) because from March to June 2010, the company under the old Board of Directors was preparing to transfer to Esquel Group, causing employees to feel insecure and seek other paths to develop their careers. However, after the company joined Esquel, the turnover rate increased even more due to the new management method and job requirements, so many employees felt that it was not suitable, could not adapt in time, or simply did not meet the job standards, so they left.

In 2011, the rate of job termination in March and April increased (10.98% and 8.7%) because it was the time right after Tet, when many employees found new opportunities. In October, the rate of job termination once again increased to almost the highest level of the year (9.09%) because at that time the Government adjusted the minimum wage. Employees were also adjusted but not significantly because they were not subject to the minimum wage scale, leading to a narrowing of the gap between workers (unskilled workers) and employees (skilled workers). This also caused labor fluctuations.

In 2012, the rate of resignation was also quite high in the first months of January and March (7.09% & 10.17%) because it also fell before and after the Lunar New Year. However, the majority of employees who quit their jobs were those with short seniority, who had not yet adapted and were not patient enough to cultivate and improve their own abilities. From April onwards, the workforce in the employee category decreased significantly and began to stabilize (only 2.39% in May).

3.3.3.2 Analysis of reasons for leaving the job (See Appendix 6 & 7)


Table 3-3: Table of data on reasons for leaving EAV employees


REASON FOR LEAVING EMPLOYMENT

Y2010

Y2011

Y2012

Nature of work

12%

26%

13%

Working conditions

0%

2%

7%

Working hours

15%

5%

0%

Salary & Benefits

9%

15%

3%

Colleague Relationship

3%

1%

0%

Moving

3%

5%

7%

Move to another garment company

0%

0%

0%

Career Development

3%

1%

3%

Work location

3%

2%

0%

Health

9%

4%

3%

Family

12%

9%

17%

Learn more

0%

9%

17%

Own business

3%

0%

3%

Other

29%

21%

27%

(Data source: EAV)


Looking at the data table, we can easily see that in 2010, the reasons for employees quitting their jobs focused on working conditions/environment and working hours. Indeed, under the previous management mechanism, because they mainly did processed goods, orders were always passive. Although the salary was relatively good, workers always had to work overtime a lot, even on Sundays. Factory owners were private, so they only focused on producing goods and did not invest much in the working environment.

The above reasons have been improved quite well by the new Board of Directors of Esquel. However, Esquel has to face the situation of employees leaving the company due to high work pressure, difficult nature of work, income, family problems, etc. This further urges the Board of Directors, especially the HR staff, to promote the implementation of effective exit interviews and conduct surveys to find out the true desires of employees to increase their loyalty to the Company.


35%


30%

29%


27%

25%

26%

20%

21%

17% 17%

15%

15% 15%

13%

12%

12%

10%

9%

9% 9% 9%

7%

5%

5%

0%

Calculate

quality of work

2%

0%

Working conditions

3%

0%

Working hours

3%

1%

0%

7%

5%

3%

3% 2%

3% 3% 4%

3%

0%

3%

3%

0% 0%

Luong Quan Chuyen Chuyen & Phuc Ha co-residence

1%

Develop

0%

Location

Family Health Education makes family healthier

profit

to another garment company

job job

Other Scriptures

private business

Y2010

Y2011

Y2012


Figure 3-3: Reasons for EAV employee resignation

3.3.3.3 Analysis of Esquel employees' satisfaction level during work through exit interview results

Table 3-4: Statistical table of satisfaction level of employees who quit their jobs


OPINIONS OF WORKERS

Y2010

Y2011

Y2012

Nature of work

9%

25%

50%

Work intensity

6%

21%

57%

Job satisfaction

18%

32%

57%

Working conditions/environment

18%

37%

67%

Supervision by superiors

16%

33%

67%

Salary

12%

16%

63%

Benefits

31%

33%

73%

Train

26%

44%

70%

Promotion

18%

32%

63%

Relationship with superiors

9%

24%

67%

Relationship with peers

15%

43%

60%

Relationship with subordinates

21%

31%

63%

(Data source: EAV)

The above figures were recorded after the company transferred ownership to a corporation.

Esquel Group. Through the table above, we can see that employees are most satisfied with Benefits,


training, promotion. In addition, in 2012, working conditions and relationships with superiors made employees feel very satisfied, even though they decided to quit their jobs. This motivated the company's Board of Directors to continue to develop and improve.


80%

73%

70%

70%

67% 67% 67%

63% 63%

63%

60% 60%

57% 57%

50%

50%

44%

43%

40%

37%

32%

33%

33%

31%

32%

30%

31%

26%

25%

24%

20%

21%

21%

18% 18% 18%

16%

16%

12%

15%

10%

9%

9%

6%

0%

Nature Intensity Satisfaction with Conditions/Supervision Salary Benefits Training Advancement Relationship Relationship Relationship Job job environment of level to level of hierarchy to level of hierarchy to level of hierarchy

work on the same level as the subordinates

Y2010

Y2011

Y2012


Figure 3-4: Satisfaction level of employees leaving the job


CHAPTER 3 SUMMARY


Chapter 3 introduces the history of Esquel Group, from which the second Esquel Vietnam factory was established in Amata Industrial Park (Dong Nai) after the first Esquel factory in Vietnam Singapore Industrial Park (VSIP 1). This chapter discusses the organizational structure and personnel structure of the Company and presents data analyzing the personnel situation in 2010, 2011 and the first 5 months of 2012, along with comments on the reasons for personnel changes during this period.

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