As its losses grow, Hitachi Ltd’s Global Storage Technologies disk drive-making division has unveiled a cost-cutting plan that will see the company lay off around 11% of its employees and contractors, and close a factory in Mexico.
By re-organizing its manufacturing around its mega-manufacturing facilities at Prachinburi in Thailand, and Shenzhen in China, Hitachi GST says it could save nearly $300m over the next five years.
The closure of a Hitachi GST factory in Guadalajara, Mexico some time before the middle of next year will account for that 11% reduction in what is currently a 40,000-odd headcount.
Hitachi’s disk drive business was bought from IBM in 2002 for $2bn, and has been under pressure for some while. In its latest earnings announcement last month Hitachi did not detail the performance of its GST division, but said losses widened in HDD operations.
Hitachi told Computer Business Review that the already fiercely competitive disk drive market has become even tougher following last year’s merger of disk giants Seagate and Maxtor.
Alongside the closure of the Mexican plant, Hitachi GST is shuffling operations to create three centers of competency, for slide manufacturing in the Philippines, and for head-gimbal assembly and media manufacturing, in Shenzhen.
A major element of the consolidation is the move of slider manufacturing from Guadalajara to the Philippines, Hitachi said.
By putting these manufacturing sites – from component to final HDD assembly – in close proximity, we expect to realize significant cost savings and improve efficiencies and processes, which we believe will have a demonstrated benefit in our overall competitiveness, including improved time-to-market and time-to-volume, Hitachi said.
Development operations are also being consolidated, around Odawara, Japan for slider development, and San Jose, California for media development.