24438 - EPIQ/ELEX II

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Environmental Review Summary

Project Number

24438

Company Name

EPIQ NV

Date ERS Disclosed

Oct 21, 2005

Country

Bulgaria

Region

Europe

Date Revised ERS Disclosed

Oct 26, 2005

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Dec 16, 2005
Signed : Dec 19, 2005
Invested : Dec 30, 2005

Sector

Motor Vehicle Parts

Industry

other

Department

Regional Industry MAS LAC & EUR

Project Description

EPIQ EA (EPIQ or the company), an existing IFC client, is a contract electronics manufacturer (CEM) based in Botevgrad, Bulgaria, with a core focus as a Tier 2 supplier to the automotive industry. The company principally designs, produces, and sells electronic and electro-mechanical systems and sub-systems to demanding tolerances, which are integrated by major Tier 1 suppliers to the automotive industry, into core control and safety systems of the leading European car models.

The project comprises a doubling of aggregate output of both the company and its Mexican sister company EPIQ Mexico (located in Guadalajara, Jalisco State) over the period 2005–06. The proposed IFC loan would partially finance expenditure for additional production capacity and the working capital requirements of this expansion.

Environmental and Social

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow.

- Environmental and Occupational Health and Safety Management:

Both sites have injection molding and electronics assembly operations and are notably neat and tidy.

EPIQ in all its plants places a high emphasis on quality assurance and systematic working practices. The Botevgrad plant has the international motor industry ISO/TS 16949:2002 and ISO 14001 environmental management certification while the Guadalajara operation has ISO 9001:2000 certification and expects to achieve ISO/TS 16949:2002 certification in early 2006, and ISO 14001 certification later that year.

- Occupational Health and Safety Management:

Workplace air quality is measured every three years at Botevgrad and annually in Guadalajara, in both cases following local legal requirements, and is fully compliant with local and IFC requirements. Dust, tin and lead concentrations in air are well within occupational exposure limits, and noise is well controlled. Operations will move to lead-free solder by July 2006. Fumes arising from injection molding and soldering machines are extracted at source: small pressing assembly operations require two-hand push-button operation substantially controlling possible trapping hazards. Fume from manual soldering at the inspection and retouch work stations is controlled by small fans which draw fume over absorbent media. Assembly line workers are rotated to reduce risk of RSI and emphasis is placed on workplace ergonomics and lighting.

The Bulgarian factory has an on-site medical clinic staffed by a doctor during the day shift and trained paramedics at other times. In Mexico, the doctor attends the twice weekly with support at other times from trained first-aiders. These doctors undertake routine medical screening and oversee health campaigns for example promoting vaccination or prevention of hypertension. Accidents are recorded and causes investigated, are of a low frequency and typically minor in nature. Machines are generally well guarded, though minor housekeeping improvements will be made.

Both sites have emergency response plans which are regularly practiced.

- Waste water and air emissions:

Neither site generates process waste water. In Bulgaria, sanitary waste water is discharged to the municipal sewer and treated in filter beds before discharge. In Mexico, sanitary waste water is treated by the industrial estate’s waste water treatment plant and then further discharged to the city system. Effluents meet IFC requirements in both cases.

Air emissions are vents from electrically-heated soldering machines, natural gas fired drying ovens, and UV-curing coating machines. Air emissions are measured and minimal, complying fully with IFC and local requirements.

- Hazardous material handling and disposal:

Both plants use organic solvents and generate hazardous wastes such as dirty solvents, solder residues, spent flux, oily wastes and old fluorescent tubes. Wastes arising from the Bulgarian plant are either sent to licensed recyclers in Bulgaria or exported to Germany for final disposal. The Mexican plant uses licensed contractors to transport waste to licensed disposal sites. In both countries, documentation is retained to show that these wastes are appropriately transported and disposed of.

Both sites have secured and well signed hazardous materials and hazardous waste stores, though a storm drain close to the store in Mexico will be protected from possible spills.

- Solid waste management:

Recyclable elements of solid waste are segregated and sent to recycling companies.

- Labor issues:

EPIQ’s minimum working age is 18 years, and EPIQ does confirm that prospective employees exceed this age. There is no trade union in Bulgaria, though these are not prohibited, whereas in Mexico there is a trade union within Yamaver, the subcontractor of EPIQ MX. In both plants industrial relations are good. In Bulgaria, employees are recruited locally, salaries slightly exceed the local median and annual staff turnover is around 8%. In Mexico, EPIQ’s minimum salary is twice the legal minimum, though increases are paid on achievement of training and competency milestones. Staff turnover is around 15% per annum, substantially due to competition from the many other electronics assembly companies around the plant. In both cases, salaries are reviewed annually and increased according to inflation. Working is on a three shift system, with overtime payments, and employees’ benefits include medical and dental services and paid vacations.

Conclusion & Monitoring

IFC will evaluate the project’s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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