ONE of Derry’s biggest employers Seagate Technology has declined to speculate on the potential risk to jobs at its North West plant as it embarks on a global restructuring plan.
The data storage specialist, which employs around 1,500 people in Derry, said it needs to cut costs across its worldwide operations in response to changes in macroeconomic and business conditions.
The US tech group indicated the cuts would likely take the form of job losses. But it has not revealed how it will carry out the severances across its 40,000-strong global workforce.
It follows weaker than expected financial results for the latest quarter, where Seagate announced a revenue of $1.86 billion (£1.5bn) for the three months to March 31 2023.
The US group’s chief executive Dave Mosley said the weak quarter coupled with other factors “had a severe impact” on the company’s reported margins and profitability.
Seagate has also agreed to pay a $300m (£242m) penalty to US authorities for shipping $1.1 billion (£890m) of hard disk drives to Huawei in China, breaching US export control laws.
In response, Seagate announced a restructuring plan to reduce costs. The announcement made to the stock market on Thursday, indicated the savings will be made via job cuts.
It comes just days after the US Envoy to Northern Ireland, Joe Kennedy III, cited Seagate as an example of successful US investment in the north west.
Seagate originally set up in Derry during 1993. It makes recording heads for use in data storage media products which are sold by the Seagate group.
While its Nasdaq-listed parent is required to provide up-to-date financial results to the stock market, Seagate’s Derry operation is only required to publish its annual results within 12 months of the end of a financial year.
It has yet to release its 2022 accounts, but its results for the year-ending July 2 2021 were its strongest for seven years.
Seagate Ireland reported a turnover of $188.4m for the period, increasing its workforce by 101 people to 1,557.
But the latest results from the parent group show a more challenging 2023 or the company.
Seagate said its restructuring plan is expected to be completed by the end of June this year at a cost of around $150m.
“The charges are expected to be primarily cash-based and consist of employee severance and other one-time termination benefits.
“The company expects to realize run-rate savings of approximately $200 million on an annualized basis starting in the fiscal first quarter 2024.”
Asked whether it plans to enact redundancies in Derry, the company said: “Seagate cannot speculate on any numbers or positions while our 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."
