August 4, 2009 / 8:42 AM / 11 years ago

UPDATE 2-Seagate to cut 2,000 Singapore jobs, sees charges

* To relocate hard disk drive plant from Singapore

* To lay off 2,000 workers out of 8,000 staff in Singapore

* Sees $80 mln costs, $40 mln annual savings (Adds financial forecasts)

SINGAPORE, Aug 4 (Reuters) - Computer hard disk maker Seagate Technology (STX.O) said it will lay off 2,000 workers in Singapore, or more than 4 percent of its global workforce, as it closes manufacturing facilities in the city-state in a bid to cut costs by $40 million a year.

The move, which Seagate said would result in restructuring charges of $80 million, follows a slide in electronics exports from Singapore this year due to weaker consumer demand in the economic downturn.

“We are moving our hard disk operation at Ang Mo Kio (in Singapore) to other Seagate sites in other countries,” company spokeswoman Lotus Tan told Reuters but did not provide further details.

She said Seagate employed a total of 8,000 workers in Singapore and would keep Seagate’s Asia headquarters, media operation as well as a product development and design center there. According to Seagate’s website it has about 45,000 employees around the world.

Seagate said the Ang Mo Kio hard drive factory would be closed by the end of 2010 but would not meaningfully change its production capacity as it will move manufacturing to other locations, which include Thailand, China and Malaysia.

Seagate said in a filing with U.S. regulators that total restructuring charges of approximately $80 million would include about $60 million for severance payments and about $10 million for the relocation of manufacturing equipment.

It plans to record the severance charges of up to $60 million in the current quarter, with the remainder of the charges to be incurred throughout the calendar year of 2010. Seagate’s fiscal year 2009 ended on July 3.

The company expects the move to generate annual savings of $40 million when the closure is completed.

Singapore’s overall unemployment rate stood at 3.3 percent in the second quarter but the number of people employed in Singapore fell by 12,400 in April-June, twice as much as in the first quarter. [ID:nSIN384892]

Tuesday’s announcement came after Seagate already said in May it had initiated a restructuring plan that included a reduction of about 1,100 employees or 2.5 percent of the company’s global workforce. [ID:nN13385184]

In July, Seagate raised its forecast for margins and overall industry sales in the current quarter, citing a larger-than-expected increase in corporate demand for computers. [ID:nN21260962] (Reporting by Nopporn Wong-Anan and Harry Suhartono and Sinead Carew in New York; Editing by Anshuman Daga)

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