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Seagate lays off employees the second time this year

The logo at Seagate Headquarters

The Seagate Headquarters Logo in Scotts Valley California

As more and more companies are now facing the blow of global recession, drastic measures are implemented to ensure survival and even growth in this time of economic crisis. One of the leading companies in the hard drive and storage solutions industry, Seagate announced a few weeks that it is initiating its restructuring plan. As part of this plan, Seagate has to lay off 2.5 percent of its total workforce. This is actually the second time this year that Seagate has taken such measures. The first one was announced in January.

For this Goliath of a company, 2.5 percent means a lot of employees. To be exact, 2.5 percent represents 1,100 of its employees. This is more than the first lay off, which only involved 800 employees. Seagate targets to complete the lay off by the end of July.

The reason for the layoffs

According to Seagate, this step is part of the company’s goal to reduce its operating cost and get a positive result at the end of its fiscal year, which is set on 2010. The company stated that the laying off of quite a great number of employees is needed for reaching its targeted marketing, product development, and administrative cost cut off of $300 million every quarter. The hard drive manufacturing company expects a pretax restructuring charges of more or less $72 million. These charges would be coming from employee termination costs. The company further elaborated that the workforce reduction would generate more or less $125 million in the company’s annual savings.

Aside from the 800 employees from the first lay off and the 1,100 for the current one, Seagate also closed down its Pittsburgh facility and two recording media facilities as well. On top of this, reduction of salary is also among the operation cost-saving initiatives that the company is planning to impose.

Seagate is not the only one that resorted to cutting off its workforce as a measure to fight off recession. There are a lot of giant companies that have made the same step. This includes Seagate’s major competitor, Western Digital. This company has laid off 2,500 employees before the end of 2008.

Some experts are expecting that Seagate would take steps to prepare itself in order to be able to compete with the emerging market. But the company seems to give no details for an upcoming Flash-based SSD line which, according to experts, would be giving Seagate the chance to be able to compete with the resurfacing market.

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