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From an Indian Newspaper:
Financial Daily from THE HINDU group of publications
Tuesday, July 21, 1998
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JTS Tech trims staff to cut costs
Date: 21-07-1998 :: Pg: 01 ::
Col: a
R. Balaji
CHENNAI, July 20
JTS Technologies Ltd (JTSTL), the multi-crore hard disk drive manufacturing unit located in the Madras Export Processing Zone (MEPZ), has drastically pruned its work force as a cost cutting measure. The company had to resort to retrenchment as a last resort, since it was a question of survival, according to Mr. Harpal Gill, Managing Director of JTS.
JTSTL, a subsidiary of JTS Corporation of the US, has in the last three months brought down its workforce from around 5,300 to about 2,000, as a result of the recession in the market for disk drives and personal computers. The JTS unit being a new one was particularly hard hit, added Dr. Harpal.
The unit actually had 8,000 workers on the rolls about a year ago, but it had been cutting down on employee strength because of the recession. It had managed without retrenchment initially, and had simply stopped reappointing workers in the place of those who left. Being a ''high turnover job because of the young workforce'', it had helped to bring down the employee numbers significantly, he said.
Under the circumstances prevailing in this sector, the company had to bring down the production of disk drives in order to cut expense and improve ''chances of survival''. Otherwise, it would have had to take on the industry majors ''head on''.
These established units had the capacity to put a low cost product in the market, therefore instead of competing with them, the company was in the process of establishing a niche market for itself, he said.
Towards this end, the JTSTL was in negotiations with original equipment manufacturers (OEM) for contract manufacturing ''to get visibility from them''. Further, discussions were at an advanced stage with ''key OEMs in video game business''. At present the unit was manufacturing about 1,500-2,000 drives per day and ''some of them were being marketed in India'', he added.
JTSTL is rapidly indigenising the components requirement of its disk drive assemblies, and once this was achieved, it would provide a 25 per cent cost advantage through savings on labour and freight. In addition, the unit has a standing purchase order from Compaq for 1.2 million drives. The Chennai site of JTSTL had been qualified by Compaq and, two drives are in the process of receiving Compaq qualification, according to Dr. Harpal.
JTSTL is the sole manufacturing unit servicing the parent company's global market. The assembling plant has been set up with an investment of Rs. 120 crores. The unit commenced operation in March, 1995 and was then estimated to the third largest company in information technology and export in India. In the two years between 1995-96 and 1996-97, its revenue increased from Rs. 93 crores to Rs. 627 crores, with a net foreign exchange inflow of 12 per cent.
Pic. caption: TRIMMING THE WORKFORCE: Inside JTS Technologies, Madras Export Processing Zone (MEPZ).
Pic. credit: Bijoy Ghosh
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--Dennis |
