IN the first major retrenchment in Singapore in recent years, HGST, the enterprise hard drive subsidiary of Western Digital, yesterday axed 530 employees - almost a quarter of its Singapore staff. This is believed to be the company's biggest layoff exercise in Singapore in the past 20 years.
In a statement yesterday, HGST, which specialises in data storage and has 45,000 workers globally, said that the move was not "revenue-driven", but a response to "new market realities occurring in the storage industry".
"It is a market-driven action that will benefit factory efficiencies as the mix of product deliverables changes to meet market needs," it said.
HGST was formerly known as Hitachi Global Storage Technologies before US-based Western Digital acquired the Hitachi-IBM hard disk drive venture for US$4.3 billion in 2011. HGST said that it was committed to maintain a presence in Singapore - even though most of its hard drive production here will be shipped to a cheaper plant in Thailand.
"HGST will be repositioning its Singapore manufacturing facility (in Kaki Bukit) from a mass volume manufacturing site to a pilot production, engineering and shared service centre," said the company, which has been in Singapore since 1994 as part of IBM's storage systems division.
The remainder of its downsized 1,840 staff (out of 2,370 before the layoffs) will continue to be employed in HGST Singapore, said a company spokeswoman. Many of these are engineers and support staff.
Heng Chee How, executive secretary of the United Workers of Electronics & Electrical Industries (UWEEI), said in a statement that the union was saddened by the news but "we understand that the company faces keen challenges to maintain cost competitiveness".
In a facebook posting last night, Acting Manpower Minister Tan Chuan-Jin said: "Even with a tight labour market and an economy that is doing reasonably well, we will continue to see some amount of redundancy as our economy restructures. This is an inevitable reality and we will see more of this in the coming years.
"Retrenchments will happen . . . Even when the economy is healthy. Unemployment will occur even if the economy is healthy and unemployment low. We must ensure that the systems and processes are in place to help those affected."
HGST's retrenchment comes at a time when the local labour market is still tight, with unemployment at a low 2.8 per cent in September. Though manufacturing has accounted for the single biggest share of layoffs here in recent years, the number slipped to 1,250 in the third quarter from 1,630 a quarter earlier.
Output growth of the electronics cluster eased from 23.4 per cent in October to 11 per cent last month, but year-to-date output was still up 1.8 per cent.
That said, Singapore's domestic electronics exports have been tumbling for 16 months straight.
BT understands that half of the workers axed by HGST were Singaporeans, including many production operators. The other half was made up mostly of Malaysians and Chinese nationals.
Mr Heng said that HGST "has committed to UWEEI to ensure fair compensation and treatment for the affected employees".
BT understands that the retrenched workers would get a month's basic salary for every year of service with the company. HGST's spokeswoman said that the longest service among the affected workers was 19 years. The law caps the payment at 25 years of service.
HGST would also extend hospitalisation and surgical insurance coverage in Singapore and pay union membership dues for three months till March next year for the axed staff, Mr Heng said.
UWEEI and the Employment Institute will hold a job fair for the retrenched workers on Jan 16. HGST said that it had no plans "at this time" to make changes in its other manufacturing sites. Outside Singapore, the company has plants in China, the Philippines, Malaysia, Thailand and the US.
According to NTUC, the last major retrenchment here was announced by semiconductor firm Globalfoundries, which earlier this month axed 150 workers.