Seagate
has constantly transformed over the years. Its manufacturing processes have been
increasingly automated resulting in drastic reduction in manpower. The
manufacturing plants of Seagate in Singapore are examples of how technology can
help organizations shed the extra bulge. In the first quarter of 1998, Seagate
had 106,822 employees on its rolls. By March 2000, the number had come down to
61,360.
The automation of manufacturing processes is much evident in
Seagate plants in Singapore. "Fewer and fewer people are now required to
manufacture storage products," says Don E Kennedy, VP, Sales and Marketing,
Asia-Pacific. But this was not the case when Seagate set up its manufacturing
plant in Singapore in 1982, three years after the company was founded in
California. The Singapore facility was the company’s first ‘volume
manufacturing’ facility outside the US. Starting with the manufacturing of
components, the facility quickly progressed to disk drives. Within a year,
Seagate had started shipping 10MB disk drives produced in Singapore.
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Seagate’s state-of-the-art, one million square feet
facility in Ang Mo Kio in Singapore is the company’s primary manufacturing
center for enterprise and desktop disk drives. It was designed with a long-term
perspective of not only producing technology-intensive hard disk drives of today
and but also to quickly make a transition to automated technologies of tomorrow.
Presently, the facility produces Barracuda and Cheetah disk
drives with capacities as high as 50GB. "We are working on a product that
will have a 100GB capacity on a single disk, which should hit the market in
2002," says Michael Stears, Senior VP, Disk Drive Operations.
Seagate assembles all its disk drives within its nine Class
100 clean rooms, which have controlled environments. These have the capacity to
produce 50,000 disk drives every day. Seagate ensures quality of its disk drives
by sticking to extremely clean environments. Special measures are taken to
control electrostatic discharge. Assembled disk drives are then put through
rigorous tests before they are shipped to customers.
Recording media operations
Seagate’s recording media manufacturing facility at
Singapore follows exactly the quality standards that are adhered to in case of
disk or tape drives. It is a Fortune 1000 business all by itself.
Seagate’s recording media operations (RMO) at Woodlands in
Singapore is the company’s first such facility outside North America, which
began operations in 1996. It is also Seagate’s largest media manufacturing
facility. Phillip J Maher, VP, RMO, Asia-Pacific, who was one of the first
employees to reach Woodlands, recalls that there was jungle all around when he
landed there.
Automation was a far cry. "We used to wash recording
media with cloth and buckets of water. Later we used paint brushes,"
recalls Maher. But now the robots do the entire job. The manufacturing time too
has been compressed from three days to 24 hours.
Though Singapore’s RMO runs at over 100% of its production
capacity and produces over half of Seagate’s internal output, supply does not
match internal demand for media. As a result, Seagate opts for external
suppliers, mostly Japanese companies, creating competition from within. Points
out Maher, "Competition from external parties keeps us on our toes to
maintain quality and production schedules."
As the demand for greater storage capacities rises, media
manufacturers, including Seagate, are looking for alternatives to currently
available material. According to Maher, glass is being looked at as one of the
options. But whether glass or any other material, Seagate is keen to be in the
forefront. RMO facilities worldwide are a part of Seagate’s
vertically-integrated manufacturing strategy designed to take advantage of
complementary technical capabilities in heads, media, motors and semiconductors.
Internet drives storage
Seagate is clear about the strategic trends in technology and
has taken to the internet in a big way. It has come out with the slogan,
"Internet is driving storage is driving the internet!" Seagate’s
immediate focus is on internet service providers and server products.
The company has been closely observing the shift that is
taking place in storage supplied by systems and solution providers, and is
adopting business strategies accordingly. At this juncture, Seagate is also
considering notebooks as a window of opportunity.
The company has begun marketing storage area network (SAN)
solutions. It is seriously looking at business opportunities in server
appliances and consumer solutions. Says Kennedy, "Our design and research
centers have come up with storage solutions for consumer products like personal
video recorders and home TV." According to Kennedy, India has been slow in
adapting to removable storage systems. He feels that the market needs to be
educated on this. He is planning to sign up as many business partners as he can
in India. Access to Seagate’s website for business purposes will soon be
provided to registered partners.
The picture on the revenue side is not bright for Seagate.
Its revenue dipped marginally in 1999 compared to the previous year (see Seagate
Fact Sheet). At the same time, it holds cash worth $1.89 billion, which is a lot
of money. Things look good at the gross margin level as well, up 20.9% in the
third quarter of this financial year compared to the second quarter figure of
18.9%. This has contributed to an eighth consecutive profitable quarter. And
productivity per employee has shot up by 112% over the same period.
New products on the anvil
On the technology front, the company has demonstrated the
world’s highest disk drive area per density capacity of 45GB per two-inch
disk. Seagate will be the first to market products on a 15,000Rpm platform, with
ultra 160 SCSI and fiber channel versions, all manufactured in automated
environments. These are expected to be available in the market by September this
year.
With processes being increasingly automated, another lot of
employees may lose their jobs. But that is not Seagate’s immediate concern.
Its priority right now is to consolidate its manufacturing facilities and
empower them with automation to push up the production of disk and tape drives.
These efforts are already yielding results in terms of disk drive production.
Seagate produced 10.47 million drives in the third quarter of the current
financial year (January-March), which is a record.
However, the high production levels may not yet help Seagate
to recoup its revenues completely because in the three quarters so far, it has
been able to notch up only $4.9 billion. To match last year’s revenue figures,
Seagate has to achieve $1.9 billion in the last quarter, which is next to
impossible considering the fact that the best first quarter revenue figure
stands at $1.65 billion.
Looking at the revenue figures from a long-term perspective,
one can be certain that the consolidation efforts, supported by greater
efficiency due to the high degree of automation, are bound to help Seagate
bounce back. From the marketing angle, Seagate wants to explore new
opportunities in core business and emerging markets as well as applications with
a focus on the internet. It continues to focus on key customers, including large
original equipment manufacturers like Compaq, while its balance sheet, assets
and technology prowess provide it the required stability.
Sylvester Lobo
in Singapore