Seagate shut down one of its largest hard drive manufacturing plants. It’s located in Suzhou, China. About 2,200 employees lost their jobs. This plant doesn’t produce HDD subassemblies, so it isn’t vertically integrated. About 1.1 million square feet of space in now available. Seagate bought the plant from Maxtor in 2006. Here’s a statement from Seagate:
As part of our continual optimization of operational efficiencies, Seagate has made the difficult decision to shut down its factory in Suzhou, China. We regret that our Suzhou employees will be affected by this action, which reflects our ongoing commitment to reduce Seagate’s global manufacturing footprint and better align the business with current and expected demand trends.
By closing the plant in Suzhou, Seagate can optimize logistics and avoid shipping subassemblies there. Instead, they can focus on their manufacturing plants in Wuxi, China and Korat, Thailand. Both of these plants produce subassemblies and are vertically integrated. This might reduce the manufacturing cost per drive.
Seagate intended to reduce their HDD shipments from 55-60 million to 35-40 million per quarter. The company fired 8,000 employees in 2016.
Here’s a definition of vertical integration from Wikipedia:
In microeconomics and management, vertical integration is an arrangement in which the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration, wherein a company produces several items which are related to one another. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buying it from suppliers).