Seagate closing Singapore plant
2000 jobs to go
Seagate is closing a hard disk drive facility in Singapore, making up to 2,000 redundancies as it strives to reduce costs.
The one-million-square-foot site at Ang Mo Kio became operational in 1997. Seagate says it makes all of the company's mission-critical hard drives - understood to mean enterprise drives. There are about 4,000 employees at the plant.
Seagate will close the site down at the end of this year, according to an SEC filing, with its HDD manufacturing operations transferred to other facilities. The company's Asia International Headquarters will remain in Singapore, where Seagate also maintains a Science Park with 300 employees, and a media plant at Woodlands with more than 5,000 staff. Seagate currently has around 8,000 workers in Singapore.
There will be an estimated $80m restructuring charge for the closure, including about $60m for severance costs, $10m for the relocation of manufacturing equipment, and another $10m for other plant closure and relocation costs. Seagate has said 2,000 staff from Ang Mo Kio will lose their jobs, which amounts to 4.2 per cent of its 47,500 global head count. It hopes to save $40m a year with the plant shuttered.
The company lost $3.09Bn in its financial year ending June 30th, and has been restructuring to save costs since the beginning of the year. It said it would cut 1,100 jobs in May and has not said that this latest closure is the completion of its restructuring effort.
The need for restructuring was triggered by the recession and by misteps which ceded areal density leadership in the 2.5-inch drive space to Western Digital. This resulted in Seagate replacing CEO Bill Watkins at the beginning of the year with chairman Steve Luczo and the consequent restructuring.
Meanwhile Western Digital has been catching up with Seagate on a quarterly units-shipped basis and may overtake it. WD has undergone cost-saving restructuring itself, but is currently recruiting 5,000 people in Thailand while Seagate is sacking 2,000 in Singapore. At the end of these two processes WD may well employ more workers than Seagate, an estimated 52,500 versus Seagate's 45,500. ®