Western Digital Closes Plant In Malaysia

Western Digital has 3 plants in Malaysia after taking over troubled US company Komag. The plants are located at Johor, Penang & Sarawak. From the news below, around ~1000 will be losing their jobs in Kuching, Sarawak. It is bad enough that Sarawak is one of the least developed state in terms of high-tech industries, with this blow there are NO longer any big companies operating there with the exception of X-Fab whose lifeline is sustained by the local state government.

Western Digital has faced up to the deepening recession by announcing the loss of up to 2,500 jobs, executive pay cuts and the closure of manufacturing plants in Malaysia and Thailand.

These actions are the result of a sudden and dramatic fall in demand for hard drives, particularly OEM demand for desktop, notebook and enterprise-SATA drives, which started in October and significantly accelerated through November. It affects all geographies with Russia, Korea and Latin America most affected through restricted customer credit access and weakening of local currencies against the dollar.

Tight credit markets worldwide have led customers in all channels to reduce inventories. WD expects the reduced demand run-rates to last well into 2009.

It says that revenue guidance of $2.025bn - $2.150bn, issued on October 23, no longer applies. Industry pricing is significantly more competitive than it expected and WD now expects revenue for the quarter to be $1.7bn - $1.8bn.

In total the company is halting all manufacturing operations from December 20 until January 2 2009. Pay for all its executives, board-level directors and other senior management is being cut. One of the three hard drive manufacturing plants in Navanakorn, Thailand will close as will one of its two media substrate facilities in Sarawak, Malaysia.

There will be a reduction in the number of temporary workers and a reduction in shift overtime, and workers who leave will not be replaced. This is intended to reduce manufacturing work hours by up to 20 per cent. The capital spending budget for fiscal 2009 will be cut from $750m to approximately $500m.

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