Seagate Technology is a global data storage company that was established in 1979. At present, it is incorporated in Dublin, Ireland and has its principal executive office in Cupertino, California, USA. Seagate offers the industry’s broadest portfolio of hard disk drives, solid state drives and solid state hybrid drives. In addition, the company provides an extensive line of retail storage products for consumers and small businesses, as well as cloud storage systems and solutions, along with data recovery services for any brand of hard drive and digital media type.
Since opening its operations in Thailand in 1983, Seagate has invested more than US$2.5 billion in capital and it has built two manufacturing facilities with over 16,000 employees. Seagate’s Teparuk, Samut Prakan facility initiated operations in 1988. This world-class facility employs state-of-the-art manufacturing technology and machinery to produce head gimbal assembly (HGA) and head stack assembly (HSA), R&D and Global Financial Services. The facility occupies a land area of 18.1 acres with a built-up area of 800,000 square feet. Meanwhile, the Korat campus began production in 1996. It is the largest hard drive facility in the world. This facility produces slider, head gimbal assembly (HGA), head stack assembly (HSA), and drive assembly and R&D. The plant occupies a land area of 59.6 acres and has a built-up area of about 2,500,000 square feet. Interestingly, neither campus is located in an industrial estate.
Not long ago the Thailand Investment Review team was afforded the opportunity to interview Mr. Jeffrey Nygaard, Senior Vice President of Global Head Operations. It was a fitting moment to learn more about Seagate as a corporate organization, its business activities in Thailand, and the company’s future plans.
Glancing at his resume, Mr. Nygaard has more than 20 years of experience in design and operations. In 1994 he joined Seagate and held a variety of managerial and executive positions in both the US and Asia. Twelve years later, in August 2006, he returned to the Kingdom as the Vice President and Country Manager for Thailand operations. Then in June 2009, his role was expanded to include operations in Penang, Malaysia. Later, in 2013, Mr. Nygaard was promoted to the position he currently occupies. Accordingly, he now has responsibilities for Seagate’s wafer fabrication in the US and Ireland, in addition to the Slider and HGSA manufacturing in Thailand, Malaysia, and China. The six sites situated across three continents comprise about US$3.6 billion in capitalization and 19,000 employees.
To begin, Mr. Nygaard explained that a key asset of Seagate is its human resources. The overwhelming majority of the company’s team members are locally-hired Thais. Upon closer inspection, 90% of Seagate operators have high school diploma, while the remaining 10% graduated with a bachelor degree or continued on to the master degree level. Seagate technicians have a two-year associate degree that qualifies them to work with the sophisticated machinery used in production. The assembly floor at Seagate is fully automated and therefore it is essential that the skills and knowledge of the work force be upgraded on a consistent basis through training. At the professional level, to support Operations, R&D, and Global Finance Services, 73% have bachelor degree, 26% hold a master degree, and 1% have a PhD, primarily in the fields of physics and engineering.
Mr. Nygaard mentioned that a number of Thai employees are given the chance to gain overseas experience through either normal business travel or the Seagate exchange program. This can last from three months to one year depending on the
qualifications of the job and involves the participation of some 16 to 20 staff per quarter. As Seagate is a vertically integrated company and its supply chains are interrelated on a global scale, it is vital that Thai team members understand the business operations of Seagate not only on a national level, but also worldwide. Consequently, the development of the company’s Thai human resources occurs regularly by way of intra-firm transfers or off-site training sessions.
Meanwhile, between six to seven expatriates work at Seagate’s Thai facilities at any one time. Contrary to the standard multinational model, these expat team members are focused primarily on either technology transfer and support or management and leadership development. With a very employee-centric environment in place, the attrition rate is low. It is obvious that for Mr. Nygaard a skilled work force is a major reason for the success Seagate has attained in Thailand.
For the past 15 years, Seagate’s Thailand R&D center has developed technical expertise in manufacturing processes, such as high-precision assembly and fabrication processes, nanometrology, complex test and analysis. Manufacturing-related R&D ownership transfers (i.e. complex process technology, sophisticated automation and advanced metrology) have been made from the US to Thailand in the past several years as well. Further, over the past several years, there is an increasing focus on product development. Without a doubt, Seagate has significant R&D activities in Thailand and its R&D spending in Thailand amounted to US$55.4 million for fiscal year 2014.
Likewise, Seagate collaborates closely with local universities in R&D activities. Since 2003, the company has launched engineering hubs with Khon Kaen University (KKU), Suranaree University of Technology (SUT), and King Mongkut Institute of Technology - Latkrabang (KMITL). The aim is to give graduate students hands-on activities and experience with recording technology as well as to supplement Seagate’s own personnel development purposes. This partnership was boosted significantly during 2007-2011 with the Thai government’s support through the HDDI initiative of the National Science and Technology Development Agency (NSTDA). As a result, R&D ownership transfers have occurred from the US to Seagate’s Thailand campuses in the areas of process technology, process metrology, and automation technology.
Another outstanding feature of Seagate is its strong culture of corporate social responsibility. During the Thailand floods in 2011-2012, the company sponsored US$1 million for its Thailand floods relief and recovery fund. Being a environmentally friendly company, Seagate has taken many steps to minimize the environmental impact of its operations. Seagate is committed to Corporate Social Responsibility efforts to raise the interest of the young in science, technology, engineering and math (STEM) education through hands-on learning opportunities for children. As part of this focus, Seagate looks to inspire tomorrow’s digital creators, consumers and innovators by catalyzing students’ interest in STEM education. The company also places an importance on extending these learning experiences to the disadvantaged as part of its outreach to surrounding communities.
Similarly, Mr. Nygaard highlighted how Seagate affords the opportunity to its assembly workers of completing their high school education by providing subsidized classes on-site during off-hours. Additionally, Seagate has set aside US$3.5 million for R&D projects and joint scholarships with top Thai universities as well as sponsoring 10 company scholarships for higher education. Corporate social responsibility is not just about helping one’s neighbors or looking after the environment, but improving the lives of the employees.
Seagate is committed to Thailand. It was reported by The Nation that the company will continue to invest in the Kingdom for three reasons – it has strong teams, both technical and operating, Asia is a high-growth market for data storage, and the cost structure for professionals, both engineers and technicians, is still good. Plus, the four largest manufacturing bases in Asia for Seagate are in Thailand, China, Malaysia and Singapore. Taken as a whole, Asia contributes more than 40% of the company’s total revenue. In fact, Seagate exported Bt110 billion worth of hard drives in 2014.
Turning to the matter of the Board of Investment (BOI), Seagate’s Senior Vice President of Global Head Operations remarked that there has been productive and substantive interaction and collaboration between the two organizations over the span of three decades. As examples, he indicated BOI’s active consultation with Seagate concerning policies involving the HDD sector, BOI’s mechanics, particularly its one-stop services for staff, and the BOI’s assistance in navigating the connections to the Thai government. “The BOI is trying to promote industries in the country that promote the types of businesses that the government and the people of Thailand want in the country”, observed Mr. Nygaard.
Furthermore, with the ASEAN Economic Community (AEC) on the horizon, Mr. Nygaard commented that elements of the AEC that enable the movement of goods and people across ASEAN is likely a good things but we need to understand the specifics of AEC regulations. The company has a strong logistical team that is ready to move and it is confident to retain the best and the brightest of its team members in order to take Seagate to the next level.