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Hitachi lifts output in China
By John Liu (Shanghai Daily)
Updated: 2007-03-28 13:49
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Hitachi said last week it plans to close factories in Mexico and Japan and move some operations to China, Thailand and the Philippines. The company will also cut 4,500 jobs at its disk-drive business, leading to the savings in the next five years.
"It's really where are customers are moving," Dirk Thomas, president of the Tokyo-based company's storage technologies unit in China, said in a telephone interview with Bloomberg News fromHong Kong. Lower labor costs will account for most of the savings, Thomas said on Monday.
The cost cuts may help Hitachi meet its goal of making the disk-drive business, which accounts for 5.8 percent of sales, profitable in 2007. The unit, whose customers include Dell Inc and Apple Inc, hasn't made a profit since Hitachi bought factories from International Business Machines Corp in 2002.
Production at Hitachi's three disk-drive factories in the southern Chinese city of Shenzhen may rise to 40 million units this year from 20 million in 2006, Thomas said.
Hitachi, the world's third-biggest disk-drive maker, in February estimated the disk-drive unit's operating loss widened to 43.7 billion yen (US$370 million) in the year ending March 31, from 27 billion yen a year earlier, because of falling prices.
Shares of Hitachi rose 3.1 percent to 903 yen at the close on the Tokyo Stock Exchange yesterday. The stock advanced 11 percent in the past 12 months, outpacing a 4.3 percent gain in the Nikkei 225 Stock Average.
The Shenzhen plants produced 80 percent of the company's desktop-computer disk drives last year, Thomas said.
The facilities, which also make disks used in drives, aim to double production of the parts to 80 million units this year, Thomas said. China will account for 65 percent of the company's disk production by the end of 2007, he said.
"Materially, all of our desktop products in the near term will be produced in southern China," Thomas said.
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