Standing Guard against SARS

How a big factory in Southern China is keeping the disease out

As the red-bereted security guard pokes a thermometer into my ear, it occurs to me that I've never had to clear a pre-interview hurdle remotely like this one. I'm in the lobby of one of the world's largest factories, Flextronics International Ltd.'s flagship southern China facility, a place that has emerged as yet another front in the war against severe acute respiratory syndrome (SARS). If I'm running a fever, I'm going to be sent to the factory clinic -- or sent packing.

I pass the temperature check and head inside. What I find is a factory on high alert and a management eager to reassure workers, customers, and me that the situation is under control. Tim Dinwiddie, a 40-year-old Louisville native and Motorola Inc. veteran who has run the plant since 1999, isn't sounding any alarms. "It's business as usual," he says.

Well, not quite. From top management to small-group team leaders, Flextronics is on a war footing. Since the late March death of a worker from what authorities and company officials say was tuberculosis, a crisis task force has been meeting daily to keep workers informed of the latest health news in and around the factory. The crisis management effort took on more urgency after an Apr. 15 report by the New York-based China Labor Watch that hinted Flextronics had a SARS problem. Flextronics denies it.

Like other multinationals in the area, the contract manufacturer is enforcing a series of rigid procedures to ensure the epidemic doesn't darken the door of its 150-acre factory complex in Zhuhai, on the western edge of the Pearl River Delta next door to the former Portuguese colony of Macao. The stakes are high. The company has invested $600 million since 1996 in a complex of seven plants that employs 11,600 workers and produces about $1 billion worth of products a year. Most of the world's Microsoft Corp. Xbox game consoles are made here. Other big customers include Palm, IBM, Dell, Sony Ericsson, and Motorola. So far the virus hasn't cut into Flextronics' expansion plans for the site. Five more factories are on the drawing board to keep pace with increased business by big customers such as Microsoft and Dell Computer Corp.

Just how those plans develop may depend on the march of the SARS virus across China. Flextronics operates factories throughout the country, employing a total of 34,000 people. Most are in Guangdong Province's Pearl River Delta, the world's most important manufacturing site and the place where SARS probably originated. A severe epidemic could disrupt production for many global electronics companies.

So Flextronics has been battling since late March to prevent SARS from affecting its business. The campaign began in earnest on Mar. 28, when an assembly-line worker named Wang Junfei died of a respiratory disease in one of the company's dormitories. Wang's best friend, Zhu Xuen Qin, also became sick. Rumors spread through the factory's panicked workforce that the two had SARS. Flextronics management says it quickly probed the situation and issued a statement, replete with official medical reports, showing that the two workers had suffered from tuberculosis, not SARS. (With five million tuberculosis patients nationwide, TB is a far more deadly health problem for China than SARS.) The 30 workers in Wang's unit were placed in quarantine. Adding to the fears of an epidemic, a dozen other workers came down with a less dangerous form of pneumonia around the same time; all have recovered.

The company has also had to work hard to keep its customers from panicking. Some of the 14 companies for which it makes products were wary of accepting shipments from southern China, nervous that the virus might survive a sea journey. Flextronics gave them data showing that the bug only survives a few hours outside the body. The company also had to battle rumors, which it denies, that some Xbox production would be shifted to other countries. A Microsoft spokesman says the company has no plans to move Xbox production out of China. Another customer, Sony Ericsson, says it has contingency plans in place to transfer production of its cell phones elsewhere if shipments from Flextronics are disrupted. But for now it sees no reason to do so.

In the plant, Flextronics' goal is to keep workers calm. All staff who have been outside the Zhuhai area must have their temperature taken daily for 10 days, which is believed to be the maximum incubation period. Following Wang's death, Flextronics tightened cooperation with local hospitals to ensure that management is notified immediately if any worker shows up for treatment.

In his career, the low-key Dinwiddie has dealt with fires, typhoons, and the Y2K bug, yet "they all pale in comparison to this," he says. Phone calls, Internet links, and videoconferencing are keeping customers in the loop. But the daily visits by delegations of manufacturers and securities analysts have dropped to virtually zero. "My only concern is if this lasts another 6 to 12 months," Dinwiddie says.

He has tried to shine as much light as possible on the mysterious disease. Local doctors and public health officials have briefed the plant's staff. Official notice boards throughout the various factories are covered with information about SARS. Workers are required to wash their hands before and after the two meals a day that they eat in the company canteen. Since early April, newly hired company workers have had to eat in a special section of the canteen for the first 10 days of their employment.

Inside Flextronics' factories, fear of the disease actually seems to be abating. Management says a third of its workers wore masks in early April, but now almost no one does. In interviews, plant workers showed concern but no panic. "I'm a little bit worried, and I don't go to crowded places," says 20-year-old Chen Ying, a quality assurance worker from Jiangxi who works on the Nvidia Corp. graphics card that the plant produces. "I'm not concerned," says Liang Yu Xiu, a 22-year-old line operator. "Life is still very normal here." Liang, a three-year veteran of the plant who takes home about $130 a month, takes time at the end of each shift to study the latest SARS-related information on the notice board. And she knows that "if you have flu-like symptoms, you have to go to the clinic."

Indeed, once visitors have run the gauntlet of health checks, I found an almost surreal air of normality in the complex and surrounding area, which is still rural, with its banana and sugarcane plantations only slowly giving way to new factories. Pedal-powered trishaws still ply the streets. Company basketball teams square off in a tournament that had been postponed by SARS. For now, Flextronics remains an island of calm amid the storm that is engulfing southern China. Tim Dinwiddie hopes he can keep it that way.

By Mark L. Clifford in Zhuhai, with Pete Engardio in Hong Kong

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