Hitachi to cut 11% of workers in hard disk unit
HITACHI Ltd, Japan’s biggest electronics group by sales, said it will eliminate 11 percent of its workers at the hard-disk drive unit and shut factories in Mexico and Japan to turn around the unprofitable business, Bloomberg said today.
About 4,400 out of the 40,000 jobs worldwide at the disk unit will be cut, saving about US$300 million over five years, the Tokyo-based company said today in a statement through Business Wire.
Hitachi, which also sells consumer electronics and nuclear power equipment, has about 327,000 employees worldwide. The company’s stock gained as much as 5.4 percent in Tokyo today.
The job cuts and factory relocations are part of Hitachi’s plan to return the unit to profit and tap growing demand for disks used to store computer data. The unit will probably report an operating loss of 43.7 billion yen (US$370 million) this fiscal year because of falling prices, Hitachi said in February.
“It’s a plus for Hitachi as it can increase the company’s production efficiency,” said Haruo Sato, a Tokyo-based analyst at Tokai Tokyo Securities Co. “The point is whether the company, which hasn’t been good at making products cheaply, can improve its manufacturing technology.”
Hitachi, which bought the hard-disk operations of International Business Machines Corp in 2002, ranked third among makers as of the third quarter of 2006, according to researcher IDC.
The company had a 17 percent share of a global market that will probably grow about 13 percent to 494,300 units in 2007, IDC forecasts.
Production of hard-disk drive parts known as sliders will move to an existing factory in Laguna, Philippines, and a facility in Guadalajara, Mexico will be shut, the company said.
Hitachi will concentrate manufacturing of the disks at its factory in Shenzhen, China, and will phase out production in Odawara, Japan by the fourth quarter of 2007. At its facility at Prachinburi, Thailand, the company will increase output of 2.5-inch automotive hard-disk drives, it said.
The company said in February will book 180 billion yen in depreciation charges this fiscal year, 89 percent of which is for the disk drive business, it said.
Hitachi had initially forecast a return to profit for the unit in 2006.
“Steeper than usual price declines were the main reason,” the company reversed its projection for the unit to a loss, Hiroaki Nakanishi, who heads Hitachi’s disk drive unit, said at a news conference in Tokyo today. “We also failed to introduce new products effectively.”