IBM UK Ltd’s Havant, Hampshire-based disk drive plant, ordered at the beginning of the year to go out and find other peoples’ washing to take in or face the risk of closure, has won its first big customer in the shape of Western Digital Corp. The plant has signed with the Irvine, California company to make the Caviar range of 3.5 drives for the European market. The work, to start on November 1, will be done within the Havant plant on a separate production line to Havant’s existing business. It will produce at a rate of 100,000 drives per quarter from the first quarter of 1994. Although IBM won’t give an investment figure, the plant will use existing test equipment from Western Digital’s Singapore plant alongside new equipment being bought by IBM, and the investment split between the two companies is likely to be roughly equal. Drives to be produced range from the 170.6Mb Caviar model up to the 425,3Mb unit. A proportion of the drives will go to IBM directly, (the firm is a large customer of Western’s), and the rest will end up in Western’s Amsterdam-based distribution centre as part of an operation designed to satisfy customers’ Just In Time manufacturing methods. The deal is part of an long-term outsourcing strategy by Western Digital, which still has a bruised balance sheet despite cost-cutting exercises over the past two years. The firm, which has de-layered its management structure and bought in a new executive team, will still be nursing debts of up to $35m by the end of the year – down from $206.5m in 1991 after refinancing. Recent outsourcing moves include the sale of its Irish production plant just under two years ago, (CI No 1,800) and the sale of its only wafer fabrication plant in Irvine to Rockwell International Corp. At the launch Charles Haggerty, chief executive of Western, expressed a need to lessen dependence on the personal computer market, where price wars are ravaging disk drive margins.
