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HOME REGIONS EMEA › Thai floods overshadow WD first quarter figures

Thai floods overshadow WD first quarter figures

by Stuart Wilson, Monday 24 October 2011

Hard drive giant WD has announced sales of US$2.7 billion for the first quarter of 2011 ending September 30th 2011. During the quarter WD shipped some 58 million hard drives with profits hitting US$239m. The vendor’s results included US$21m of expenses related to its proposed acquisition on Hitachi GST. In a conference call to discuss the results, WD also provided an update on the serious flooding in Thailand that has impacted WD’s production facilities.

Speaking during the conference call, John Coyne, president and CEO at WD, said: “As you can imagine, the WD team has been consumed recently in dealing with the relentless flooding in Thailand and its significant impact on our employees, their families, and our suppliers’ as well as on the business infrastructure in the region. We are grateful that the WD employees in Thailand are safe at this time although many of their lives and homes have been disrupted and damaged.”

“This is a disaster of unprecedented scale, with over 317 fatalities so far reported, over 9 million people affected, 700,000 homes and 14,000 factories flooded and over 660,000 workers out of work. The overall impact to the people of Thailand is immeasurable and our hearts go out to them in these trying times,” Coyne continued.

“Having addressed the safety of our people and put in place programs to continue supporting them in this crisis, we have now turned our focus and energies to maximizing our capability to meet our customers’ needs in the near term and to return our operations to normal as soon as possible. Full recovery will be a multi quarter challenge,” he added.

"We believe the unconstrained HDD demand for the December quarter is flat to slightly down from September quarter ship levels. Having said that, due to the concentration of HDD supply chain factories in various industrial parks in the flooded area, it is apparent that the HDD industry will be constrained in meeting that demand. Since WD has greater direct manufacturing exposure to the flooded areas, we believe the impact on our business in the short term will be greater than to other HDD manufacturers,” Coyne explained.

Tim Leyden, COO at WD, added: "We suspended production in all of our Thailand facilities from the beginning of last week, in order to protect our personnel and to move as much equipment as possible to locations less likely to incur water damage. At this point, we are thankful that all our employees are safe, and we moved much of the equipment which had been situated on the ground floors to higher floors."

"Despite the heroic efforts of our team, over the past weekend rising water which had first penetrated the Bang Pa-in Industrial Park flood defenses, inundated the company’s manufacturing facilities there and submerged the remaining equipment on the ground floors. At the other company manufacturing location in Thailand, Navanakorn Industrial Park, the park flood defenses were breached on Monday morning local time and water began to flow into our buildings late on Tuesday night," Leyden added.

"The flooded buildings in Thailand include our HDD assembly, test and slider facilities where a substantial majority of our slider fabrication capacity resides. In parallel with the internal slider shortages resulting from the above disruption, we are also experiencing other shortages on component parts from vendors located in several Thai industrial parks that have already been inundated by the floods, or have been affected by protective plant shutdowns," Leyden continued.

"We are evaluating the situation on a continuous basis, but in order to get these facilities back up and running, we need the water level to stabilise, after which point it will take some period of time for the floods to recede. We are assessing our options so that we can safely begin working to accelerate the water removal and either extract and transfer the equipment to clean-rooms in other locations or prepare it for operation on-site. As a result of these activities, at this point in time, we estimate that our regular capacity and possibly our suppliers capacity will be significantly constrained for several quarters," he added.

"We are working with our suppliers to effect the recovery of their supply chain and to ramp existing capacity in other locations. We are proceeding with all possible haste and ingenuity to address the situation because we are mindful of the impact on our employees, customers, suppliers, shareholders and the communities in which we operate. We are also pursuing all possible options to maximise our Malaysian facility’s throughput," commented Leyden.

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January, 2021

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