Fujitsu sale hits Thai workers

About 7,000 Thai employees of Fujitsu Ltd are facing an uncertain future after the Japanese hard-disk drive maker agreed to divest its HDD business and sell the global operation to rival Toshiba.

The global economic slowdown has hit electronics workforces severely, as lots of factories announced layoffs to cut costs.

After 20 years of operation in Thailand, Fujitsu has taken a similar route with the sale to Toshiba. Details of the agreement are expected to be announced next week.

"We are not sure about the future of Fujitsu's Thai unit and our staff. Once the deal is officially announced next week, employees will be informed of the plan," said an official at Fujitsu who spoke on anonymity.

Fujitsu (Thailand), wholly-owned by the Japanese parent, has 7,000 employees at its three factories in Navanakorn Industrial Estate, Pathum Thani.

FTC produces 2.5-inch computer hard disk drives for overseas markets in Asia, Australia, Europe and North America. Sales totalled 54.2 billion baht in the last fiscal year ending in March 2008.

The Japanese maker, which ranks fourth globally after Seagate Technology, Western Digital (WD) and Hitachi Global Storage, has reportedly been intending to divest from its HDD business for several months as its margin dipped.

The official was hopeful that Toshiba would continue operations here after the takeover. It has no manufacturing presence in Thailand.

FTC factories were running at half capacity producing two million drives a month, the official acknowledged.

"We and other HDD makers are in the same situation as the global market has plunged by 50% to 60%," he said.

US-based Seagate and WD announced plans to cut back Thai operations and lay off hundreds of employees to trim costs amid unfavourable market conditions.

Seagate is implementing a 6% job cut or almost 3,000 people globally while WD plans to close factories in Thailand and Malaysia.

Analysts anticipated weakening PC sales would hurt HDD demand in 2009, as the PC sector accounted for more than 80% of total shipments in the third quarter of last year.

According to IDC, the global information technology reseach company, preliminary results showed the PC market in Asia-Pacific excluding Japan dropped for the first time in 10 years in the fourth quarter of last year.

The volume, which was off 14% sequentially and 5% year-on-year to reach 17.2 million units in the quarter, was the first decline since the third quarter of 1998 when the region was suffering from the Asian financial crisis, IDC said in its report issued last week.

Domestic demand in key markets such as China underperformed expectations, as the regional market grew only 9% in 2008 compared to 22% a year earlier, it added.

The Electronics and Computer Employers' Association estimates 3% or 6,000 of the 240,000 people working in the industry will lose jobs in the first half of this year. It has 52 members in the electronics and parts industry.