History (1991): Hard Times for Seagate

A recent reorganization of the company has lead to the laying off of 1,650 workers in two times, first 1,200 then 450, 4% of its 41,000 total workforce.

Its president and CEO resigned.

Additionally, Seagate Technology (Scotts Valley, CA) is closing its magnetic head plant in Portugal and its repair and customer facility in Scotland. And finally, to complicate the situation, a strike began in its Thailand plant.

Life isn’t rose for the HDD leader that owns 28% of the independent OEM worldwide market estimated at $9.5 billion in 1991 by the California Technology stock letter. Seagate still remains ahead with Conner Peripherals (18%) then come Maxtor (10%), Ouantum (8%), Micropolis (6%), Western Digital (6%), NEC (5%), Fujitsu (4%), Hitachi (3%) and others (12%).

But remaining number one is not easy in front of other voracious competitors and a rather quiet market, causing an increase in stocks and a considerable drop in prices and, as a consequence, in profits.

Its 4Q91 had already not been exceptional with a $363,000 net profit on revenue of $677 million, compared with $29.7 million and $668 million respectively in 4089.

In the entire FY91, the company had reported $2.67 billion, a slight progression with earnings of $67.4 million dropping 42%. And furthermore, in its 1Q92 ending September 30, Seagate could report losses for the first time since 2 years as well as a drop in sales compared with its previous quarter.

Mitchell resigned
After Douglas K. Mahon last year, another founder of Seagate, left the company. Officially, Thomas D. Mitchell resigned as president and COO for personal reasons. His daily operation responsibilities were assigned to Alan Shugart, chairman and CEO, who will relinquish his title as chairman to Gary Filler who was vice chairman.

A graduate of Montana State University, Mitchell began his career with Honeywell in 1967. He then moved on to materials and manufacturing positions with American Forest Products, Fairchild Semiconductor and Memorex. He left his post as GM of Commodore in 1978 to help start Seagate.

Closing of the Portuguese plant
“To consolidate its operations and reduce overall operating expenses,” Seagate chose to discontinue the Portugal-based portion of the company’s ferrite head operations in Palmela headed by Caroline L. Fairbanks.

“We are planning to close it down during the second calendar quarter of next year,” said Marie-France Dolla, Seagate’s PR coordination in Europe.

This plant was set up in 1969 as Control Data Portuguesa then was renamed in 1975 Magnetic Peripherals Inc., a company where major shareholders were Control Data but also Honeywell, Bull and NCR. Control Data then acquired the totality of the Palmela plant and later became a direct division of Imprimis and in November 1989 of Seagate.

“Demand for these older gens of products (manufactured in Portugal) has been affected by the transition to the company’s higher technology products which contain Seagate’s leading edge thin-film heads currently in volume production in the company’s Far East (Penang, Malaysia) and U.S. (Minnesota) manufacturing locations,” according to Seagate. The company announced mid-91 that it will invest $7.8 million to build a second head manufacturing plant in Penang. A service facility closed In Scotland.

Additionally, the disk drive company is closing its repair and customer facility in East Kilbride (Scotland), this caused 220 employees to be laid off. The operations will be transferred to Amsterdam for the European part. This closing down shouldn’t affect the European plant in Dublin, Ireland.

Strike In Thai plant
According to information of Electronic World News and Electronic Buyer’s News, a labor-management dispute started out at Seagate Technology Co. Ltd. in Bangkok, Thailand, following a one-day strike on July 27 and two protests that involved up to 3,000 workers who are demanding better pay and conditions.

Seagate employs 16,300 people in its two Bangkok plants, one in Terapuk makes components such as heads, motors and sliders, the other one in Chochai assembles low-capacity 5.25 and 3.5-inch HDDs.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue ≠45, published on October 1991.