>>" HMT to slow output of disks in Eugene, Ore. factory"<<
exchange2000.com
San Jose Mercury News 98/06/12 11:01 pm
>>>>>>>>>>>>To trim fat inventories and adjust to slowing demand for computer hard disk drives, HMT Technology Corp., which makes drive components, will cut output at its Eugene and Fremont, Calif., factories for four weeks, a company official said Thursday.
The company is still hammering out the dates of the slowdown, but it will probably take place before and after the July 4 holiday, said Jon van Bronkhorst, HMT's vice president of business development in Fremont.
Half of HMT's 900 full-time employees at the Eugene factory will stay home for the first two weeks of the slowdown, and the other half will stay home for the second two weeks, he said.
The Fremont factory, with 1,600 employees, will follow the same schedule, van Bronkhorst said.
HMT's decision received the approval of at least one industry analyst.
''HMT continues to be profitable, and temporary reductions in production seems to be a wise move,'' said Patrick Tenney, an analyst with the San Francisco brokerage firm of BancAmerica Robertson Stephen. The firm was the lead underwriter in HMT's initial public offering in March 1996 and has been involved in subsequent secondary offerings. The firm also makes a market in HMT stock.
HMT's Eugene operation has grown rapidly since May 1996, when the company bought the former Computer Memory Disk plant at 3590 W. 3rd Ave. HMT has invested $50 million to remodel and expand the factory. In the past two years, employment has skyrocketed from 150 workers to 900 workers. The factory makes thin-film disks for hard disk drives.
During the down time, employees may take accrued vacation, or time without pay, van Bronkhorst said.
''I haven't heard a lot of negative feedback of what we're doing through our employees, predominately because we're not announcing a layoff,'' he said.
The disk drive industry is highly volatile. It is directly tied to the sale of personal computers and is now suffering from overcapacity and intense price competition.
Some analysts estimated there was a disk drive inventory of about 16 weeks -- enough for an entire quarter -- at the end of December 1997, van Bronkhorst said.
''When the industry carries that kind of inventory, then something needs to be done to adjust supply with demand,'' he said.
''Every other company in our industry is currently losing money and laying off people,'' van Bronkhorst added.
Komag Inc., an HMT competitor based in San Jose, Calif., recently announced it will lay off 480 workers, reducing its worldwide work force by 10 percent. Disk drive maker Seagate Technology Inc., of Scotts Valley, Calif., in January said it will lay off 10 percent of its workforce, or 10,000 workers.
''We are not faced with the dire straits that many others are faced with, in that we're not looking at layoffs, but we are looking at production level adjustments to get our production in sync with our customers' requirements,'' van Bronkhorst said.
The layoffs are a change of pace for HMT, which hasn't laid off workers or experienced any significant production cutbacks since 1995, when HMT bought its independence from parent company Hitachi Metals Ltd., he said.
The hard disk drive industry typically hits a lull in the summer, before government agencies, back-to-school and holiday shoppers begin making their purchases.
HMT forecasts that business will start to pick up in September.
''We're very confident that we're near the bottom, if not at the bottom, of a difficult time in the disk drive industry,'' van Bronkhorst said. <<<<<<<<<<<<<<<<<<<<<<<<<<<
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