Hard disk maker Seagate said today that it was closing its Singapore factory and cutting 2,000 jobs in the process, even as the United States appears to be coming out of one of the worst economic slums in decades.
Seagate’s plant at Ang Mo Kio will be closed by the end of next year, as it moves its manufacturing operations to low-cost countries in the region, including China, Thailand and Malaysia, to cut costs amounting to US$40 million a year.
The hard disk maker will keep its Asia headquarters in Singapore, as well as its media operations and an R&D centre in the Republic, according to wire reports.
However, the news of its plant closure will mark yet another sobering chapter for Singapore’s once-stellar electronics manufacturing sector.
The biggest layoffs had been in place two years ago, as extremely low margins in the hard disk sector forced companies to merge and move manufacturing to emerging low-cost countries to stay competitive.
Once the biggest makers of hard disks, with Seagate, IBM (now Hitachi Global Storage Technologies) and the now-dead Micropolis all based here, Singapore made 30 to 45 per cent of the world’s hard disks from 1997 to 2004.
However, the Republic has become more expensive and thus less attractive as a manufacturing base over the years, especially with the emergence of lower-cost competitors in the region.
This has, in part, forced one of the biggest rethink in economic policy in Singapore, as it looks to new areas like digital media and tourism to fill the gap left by the departure of electronics manufacturers such as Seagate.
The transition, however, will take time – probably not fast enough for those who have spent their entire working lives in an electronics manufacturing line, soldering circuits or quality-checking hard disks, and now find themselves out of a job.
The 2,000 laid off from Seagate will join about 12,000 people unemployed in Singapore in the second quarter, which accounts for an unemployment rate of 3.3 per cent.
(I wrote a paper on the relocation of Singapore’s electronics manufacturing base and the Republic’s new focus on digital media for the Hawaii-based East-West Center’s Jefferson Fellowship when I was on the programme in 2007).