Biggest employer in Derry set to axe jobs as it bids to cut costs after losses
Hard drive manufacturer Seagate is the biggest employer in Derry with around 1,400 staff.
John Hume was instrumental in bringing the company to the city back in 1993, and only last week US Special Envoy Joe Kennedy III pointed to Seagate as a success story of foreign investment in Northern Ireland.
Last week, Seagate revealed details of a $300m (£241m) settlement with US authorities for shipping over $1.1bn worth of hard disk drives to China’s Huawei in violation of US export control laws. Quarterly payments of $15m will be made over the course of five years, starting in the fiscal second quarter 2024.
At the end of March, Dave Mosley, who is Seagate’s chief executive officer, said that there had been “weaker than expected nearline demand among a few large customers late in the quarter” and revenue had come in “at the low-end of our guidance range”, making “a severe impact on our reported margins and profitability”.
“Looking ahead, we now expect demand recovery to begin towards the end of the calendar year,” he said.
But he added that “in response to this dynamic environment, we are taking aggressive actions to lower our cost structure while still positioning Seagate to thrive over the long-term and sustain our technology leadership”.
On April 20, the company committed to a restructuring plan.
The plan is intended to “align the company’s operational needs with the near-term demand environment while continuing to support the long-term business strategy”.
Seagate said the plan is expected to result in total pre-tax charges of approximately $150m, that are “primarily cash-based and consist of employee severance and other one-time termination benefits”.
“The company expects to realize run-rate savings of approximately $200m on an annualized basis starting in the fiscal first quarter 2024,” it said.
Tensions have been rising between management and staff at the Springtown factory in recent months over plans to unionise the workforce.
A Facebook page was set up where updates have been shared in relation to the dispute.
In an employee briefing letter, Seagate outlines what will happen if Unite the union ‘gets in’ to the factory.
The letter warned staff that “union activists might apply peer pressure for you to join” and that subscription fees could cost £200 a year.
If Unite is recognised at Springtown, the letter reads, it would lead to collective bargaining and Unite could “ask or make demands” about pay, hours of work and holidays.
Staff were advised that under the law, Seagate is not obliged to reach an agreement or accept demands.
The letter went on to advise staff that collective bargaining can absorb time and resources.
“It may create uncertainty, hinder our performance, increase inefficiency and introduce division and tension.
“This could restrict our flexibility to deal with your issues, customer needs, and competitive pressures.”
Seagate says it set up an ICD Forum in 2005 to represent “all employees” at Springtown and suggested that could be refreshed and re-shaped to meet the needs of workers.
When contacted for comment, Seagate said it cannot speculate on any numbers or positions while its restructuring is in progress.
“As noted in our press release, we expect this process to be substantially completed by the end of the current quarter. We have no further information to share at this time,” a spokesperson added.