SEAGATE CLOSES SINGAPORE HDD PLANT, CONTINUING ELECTRONICS

UNCLAS SINGAPORE 000734 STATE PASS USTR SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EINV CN SN SUBJECT: SEAGATE CLOSES SINGAPORE HDD PLANT, CONTINUING ELECTRONICS DECLINE REF: SINGAPORE 715 ¶1. (SBU) U.S.-based Seagate Technology announced August 4 that it would relocate its hard disk drive (HDD) manufacturing from Singapore to other Seagate facilities elsewhere in Asia by the end of 2010 and would lay off 2000 of its current 8000 person labor force. Seagate has had operations in Singapore since 1982 and was once the largest private employer in Singapore, but in recent years has moved manufacturing to other plants in Thailand, Malaysia and China. In February Seagate retrenched an undisclosed number of workers. Seagate's plant closure continues an already steady decline of Singapore's electronics manufacturing industry (reftel). ¶2. (SBU) Doug Dehaan, Seagate's Senior Vice President for Global Manufacturing Operations, told Econoff that although the recession had hurt sales and reduced production in Singapore, Seagate would likely have switched production of HDDs out of Singapore in any event. Dehaan said that Seagate's Singapore plant is its largest for HDD production, but is heavily underutilized and accounts for less than ten percent of its global HDD output. ¶3. (SBU) Seagate's HDD production will move to Suzhou, China, just outside of Shanghai. Dehaan said that lower labor cost was a significant factor in the decision to shift manufacturing to China, but noted that infrastructure advantages were at least as important. Seagate estimated it would save as much through lower electricity costs in China as it would save in labor costs. ¶4. (SBU) Seagate's announcement said the company remained committed to Singapore and would continue to base its international headquarters here as well as its product development facilities in Singapore's Science Park, and a media manufacturing plant, the largest in the world. Dehaan said that although it was difficult for Singapore to compete on labor cost, Seagate considered the high level of education in Singapore a strong advantage for product development and expected to continue to keep its high value-added production in Singapore for the long term. SHIELDS