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By Ng Baoying, Channel NewsAsia
Posted: 04 August 2009 1547 hrs
A worker at Seagate Technology inspects a disc drive at the company's facility in Singapore. (file pic)
SINGAPORE: Seagate Technology announced on Tuesday it would relocate its hard disk drive manufacturing operations from Ang Mo Kio to other existing Seagate facilities by end-2010, laying off some 2,000 employees in the process.
The company said in a statement that this consolidation is necessary in order for it to further increase efficiency and reduce costs by leveraging investments across fewer manufacturing sites.
The statement also said that Singapore would remain a key strategic partner for Seagate, with a focus on high-value activities, and the company would continue to make strategic investments in the country.
Seagate has two other facilities in Singapore – located at Science Park and Woodlands.
Singapore is home to the company's only hard drive design centre and first volume manufacturing site outside of the United States, and the first Recording Media Operations facilities outside of North America.
Seagate said its Woodlands media operation, Seagate's Asia International Headquarters (IHQ), and the Science Park product development and design centre will remain in Singapore.
It said the company is giving every consideration to relocating some Ang Mo Kio employees to other Singapore operations. Employees ending their employment with Seagate will be offered retrenchment packages in line with industry standards, which include a month's pay for every year of service.
Singapore's labour movement said the move is a last resort for Seagate, which has been in talks with the employees' union over the past few weeks.
The company will work with the union and Singapore's Employment and Employability Institute (e2i) to help affected employees.
Halimah Yacob, deputy secretary-general, National Trades Union Congress (NTUC), said: "What is most important is not to focus on the retrenchment or the fact that 2,000 people are going to be unemployed.
"What's most critical for us is what kind of support and assistance can we provide to the workers who are going to be retrenched? This is where we work closely with the company and e2i in order to put the workers through training programmes, job placement."
She noted that retrenchments in the electronics sector occur for two reasons – fall in demand due to global economic downturn and internal restructuring for cost efficiency.
"Retrenchments in the electronics sector are typically due to two reasons... one is because of poor demand, weak orders that companies are facing. To some extent, this is temporary because you can resort to shorter work week, temporary plant shutdown and wait for the orders to come," said Mdm Halimah.
"But there's the other type – ongoing review and restructuring of operations. For global companies, they have plants all over the world, so they will look for the most efficient, effective, productive way to produce this particular kind of product."
Economists said such retrenchment exercises are not surprising.
Song Seng Wun, CEO & regional economist, CIMB-GK Research, said: "Disk drive operators have been moving out of Singapore over the last few years and it is a wonder that Seagate is still around in Singapore after so long. When we look at the data itself, disk drive value added to the overall manufacturing has declined steadily."
Disk drive manufacturing is labour intensive and analysts said it makes sense for firms to shift operations to countries like Thailand, Malaysia and China where costs are lower.
- CNA/so
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From ChannelNewsAsia.com; see the source article here.
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