SEAGATE THAILAND: The company's largest employer relies on a philosophy of constant improvement to deal with a fluctuating global computer market

This is a dry season. Everybody desperate for the arrival of rain, and we do not know when it will come."

Dr Pornchai Piemsomboon, vice-president of Seagate Thailand, finds the weather analogy apt as he describes the current uncertainty in the global market for computers and related products.

‘Whenever designs of new products are given to us, we always produce at higher levels of quality than the designers expected. That justifie show efficient our factories’ competitive system is in terms of inspecting quality’
Dr PORNCHAI PIEMSOMBOON
Vice-president, Seagate Thailand

Among those waiting for rain is Seagate Technology, the world's largest manufacturer of disk drives, magnetic disks, read-write heads and other core hardware. Sales are off dramatically, to between US$7 billion and $8 billion compared with annual turnover exceeding $10 billion in recent years.

The market downturn has forced, Seagate headquarters in the United States to restructure
worldwide operations, and even its giant Thailand base - the country's largest private employer - is being affected.

Seagate worldwide has laid off approximately 10% of its workforce. Mr Pornchai said changes were inevitable in the Thai operation, although it was not because of domestic economic turmoil, as all production is for export.

"Rather, the influence on the change affecting Seagate in Thailand is the world computer market slump."

To date, slightly more than 2% of Seagate's 38,000 workers have been made redundant. The major change has been at the company's Chokchai factory, which previously did final assembly of read-write heads with some parts shipped from Singapore. Assembly has been moved to Singapore, but other production lines have been moved to Chokchai from Singapore in the interest of reducing costs.

The company closed its Lat Krabang factory and transferred all of the production to
Chokchai.

Seagate first entered Thailand in 1983 with 50 employees. In the first year of operations, it exported a modest 490,000 baht worth of products. Today, it is the largest company in the country in terms of both employees and export value.

It owns five factories worth about 32.7 billion baht, turning out products whose export value was 56 billion baht last year. The total is expected to reach 80 billion this year due to the weaker baht.

The Thailand operation is Seagate's largest - with about 35,000 of the company's 86,000 employees worldwide - and the only one manufacturing read-write heads for hard disk drives.

Networking is part of the company's strategy to reduce production costs, and Thailand plays an integral role along with Malaysia and Singapore, producing read-write heads to supply Seagate factories in other countries.

"Thailand was chosen by Seagate as its production base because the country offers lower
production costs compared to other regions in meet customers' demands," Dr Pornchai said.

The fact that Seagate has found local labour quality well suited to the type of production it requires means that investment in Thailand has continued to expand.

Seagate now operates five factories: in Well Grow industrial estate in Chachoengsao, Chokchai, Nakhon Ratchasima, Rangsit and Theparak.

The company's continuous growth in Thai-land has also been attributed to ceaseless attempts to improve to meet growing competition in the cut-throat world computer market.

"I believe in competition. Competition forces us to improve ourselves," Dr Pornchai said. "That is why I always encourage competition, even among our factories and operators, in order to create greater efficiency.

"We also need to prove to Seagate worldwide and outsiders that we can continue indefinitely to improve quality. We never stop improving. This is the' heart of computer companies in general "Whenever designs of new products are given to us, we always produce at higher levels of quali-ty than the designers expected. That justifies how efficient our factories' competitive system is in terms of inspecting quality."

Seagate was founded in 1979 and has expanded very quickly around the globe. It now has 12 production sites: five in the United states, two in Europe and five in Asia including Thailand; 13 design centres and seven distribution centres.

The company has five core product lines: disk drives, removable storage solutions for the tape-drive market, recording heads, recording media and software products.

According to Dr Porncahi, Seagate has a very flexible structure to deal with the rapid changes in the world computer market.

The company has shown that it can move rapidly when it needs to. Besides across-the-board layoffs, it also changed top management personnel in an effort to shore up revenue. Stephen Luczo was named president in September 1997 and became chief executive officer this past July.

The effort appears to be paying off. According to a company publication, gross profits were up in the quarter ending in July, and the gross mar-gin increased by more than six percentage points, developments attributed to operating improvements.

Seagate Technology (Thailand) Ltd
Established: 1983
Main businesses: manufacturing parts for computer read-write heads
Number of employees: 35,000
Assets as of end-1997: 32.74 billion baht
Export value as of end-1997: 56 billion baht

Worldwide
Seagate Technology Inc
Number of plants: 15 production and design sites
Number of employees: 86,000
1997 gross revenue: $6.82 billion
1997 net profit: $530 million