Hitachi Global Storage Technologies (Hitachi) on March 22 announced a series of manufacturing and development consolidations. These changes are expected to result in a potential savings of nearly $300 million (USD) over the next five years by streamlining operations and maximizing efficiencies.
Through the planned consolidations, Hitachi will create “centers of competency” for the development and production of sliders, head-gimbal assemblies (HGA) and media – three of the most critical components in the manufacturing of hard disk drives (HDD). Hitachi’s state-of-the-art manufacturing facilities, primarily based in Asia, are being customized to create an even higher level of specialization and reliability for these hard drive components. In addition, centralized development will accelerate the implementation of future hard drive technologies, such as patterned media and thermally-assisted recording.
“Manufacturing and development consolidation is one of the top initiatives we are undertaking to achieve long-term business health and to underscore Hitachi’s commitment to the hard drive business,” said Hiroaki Nakanishi, chief executive officer, Hitachi Global Storage Technologies. “This strategic manufacturing plan will not only improve Hitachi’s competitiveness, but will also benefit our customers by gaining greater supply flexibility, more advanced technologies and faster time to market.”
The following consolidations comprise Hitachi’s new manufacturing/development strategy, which is expected to be completed by the end of 2008:
Manufacturing consolidation
· Laguna, Philippines – increases existing slider manufacturing to become Hitachi’s center of competency for the production of sliders. Consequently, Hitachi will phase out its slider manufacturing facility in Guadalajara, Mexico, by the middle of 2008.
· Shenzhen, China – increases existing media manufacturing to become Hitachi’s media center of competency. As a result, Hitachi will phase out its media manufacturing operation in Odawara, Japan, by the fourth quarter of 2007. Hitachi’s Shenzhen operations will also become the center of competency for HGA manufacturing.
· Prachinburi, Thailand – receives new mission for manufacturing 2.5-inch automotive hard disk drives and increases existing HGA production.
· San Jose, California – retains media manufacturing, complementing media production in Shenzhen.
Development consolidation
· Odawara, Japan – becomes the center of competency for slider development.
· San Jose, California – becomes center of competency for media development.
Boosting Mega-manufacturing
Locating these centers of competency near Hitachi’s final HDD assembly plants in Thailand and China will streamline operations and advance Hitachi’s mega-manufacturing concept. This concept is based on the premise that greater levels of efficiencies can be gained by placing the whole manufacturing supply chain in a central hub.
Close proximity between the component- and final-HDD manufacturing facilities shortens cycle times and minimizes shipping costs – both of which can have a great impact on Hitachi’s ability to deliver products with time-to-market and time-to-volume leadership. Hitachi’s mega-manufacturing strategy also advances the efficiency of customers, whose manufacturing facilities are also predominantly based in Asia.
Efficiencies, Productivity and Cost Reduction
Hitachi will realize nearly $300 million in savings as a result of its planned manufacturing and development changes. This will come about through reductions in workforce, capital expenditure and other operational expenses.
Hitachi expects to reduce its roughly 40,000-person global workforce – both regular employees and contractors – by some 11 percent as a result of the closure of its Guadalajara plant.
Non-cost related benefits of Hitachi’s consolidation plan will be evident in the more efficient and productive manufacturing process – from component manufacturing to final hard-drive assembly. These efficiencies are expected to result in a shortened manufacturing process, higher product yields, less scrap and greater customer satisfaction.
About Hitachi Global Storage Technologies
Hitachi Global Storage Technologies is a storage technology leader, founded in 2003 through the combination of Hitachi’s and IBM’s hard disk drive businesses. Hitachi GST enables users to fully engage in the digital lifestyle by providing high-value hard drives in formats suitable for the office, on the road and in the home.
With its legacy in hard drive invention, Hitachi GST led the industry in celebrating the hard drive’s golden anniversary in 2006. After five decades of innovation, the hard drive has had a profound effect on the computing and consumer electronics industries. That heritage lives on at Hitachi GST through products that define the standard for hard drive miniaturization, capacity, performance and reliability.