Try the new FT.com

March 23, 2007 12:11 am

Hitachi shuts plant amid revamp of hard-disc unit

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Hitachi, Japan’s biggest electronics conglomerate, is set to close a parts factory in Mexico and cut 4,500 jobs as part of restructuring measures aimed at turning round the company’s hard-disc drive business.

The company on Thursday forecast that its hard-disk drive business – which has been in the red since the Japanese company acquired it from IBM in 2002 – would turn a profit by the end of this year and its various cost-cutting moves would save it $300m in the five years to 2011.

Hitachi, which has the world’s biggest market share for 2.5-inch drives for laptop computers, has seen rivals expanding aggressively through acquisitions. Seagate Technology, the overall market leader in the hard-disc sector, forecasts double-digit sales growth for the near term.

Hitachi said that price declines and the difficult task of integrating IBM’s hard-disc drive business have made it difficult for the unit to turn a profit.

As part of its restructuring, Hitachi is shifting production to developing countries in Asia. It is set to shut a factory in Guadalajara, Mexico, which makes hard-disc drive parts, by the middle of next year. The company will move the production to an existing plant in Laguna in the Philippines.

Meanwhile, Hitachi will focus manufacturing of the hard-disc drives at its factory in Shenzhen, China. It will phase out production at its plant in Odawara, Japan, by the fourth quarter of 2007 and turn it into a development centre. The company will also increase output of 2.5-inch automotive hard-disc drives at its facility in Prachinburi, Thailand.

“The situation will remain tough in the first two quarters of the year because of a seasonal slowdown,” said Hiroaki Nakanishi, head of Hitachi’s disc-drive unit, on Thursday. The benefits of restructuring will truly begin to be felt in 2008.”

In February Hitachi said the disc-drive unit’s operating loss widened to Y43.7bn ($371m) for the 2006 calendar year, compared with Y27bn the same period a year ago due to falling prices.

Related Topics

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

EMAIL BRIEFING

Sign up to #techFT, the FT's daily briefing on tech, media and telecoms.

Sign up now

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE