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Seagate Unfolds Strategy for Emerging Markets

One of Thailand's biggest electronics sectors is hard disk drive production. Last year's flood wreaked havoc on the industry's supply chain, especially in the case of top-tier players like {complink 4842|Seagate Technology LLC} and {complink 6308|Western Digital Corp. (WD)}.

In a previous blog, I highlighted some of the problems high-tech companies face in Thailand as a result of last year's flooding. (See: Thailand: When the Water Rushes In.) Seagate was not on the list of companies I visited during a media tour hosted this month by Thailand's Board of Investment. But I wanted to get the company's take on the flood, ask about lessons learned and the company's general impressions about doing business in this emerging Southeast Asian market. In an interview, Seagate's Dave Mosley, executive vice president of operations, discussed the disaster and his company's response.

Mosley also talked about Seagate's continued commitment to exploring business opportunities in emerging economies and expressed the conviction that many countries in Asia and South America will continue to drive growth for the entire electronics industry, hence his company's long-term investments in these regions. Here are excerpts from that discussion:

Baljko: Following the flooding, did Seagate consider relocating its facilities to less flood-prone areas of Thailand or to another country where you have existing operations?

Mosley: Seagate's pre-flood disaster planning processes and strategically placed facilities enabled the company to minimize disruption of product deliveries to our customers. While we are re-architecting and streamlining our global supply chain operations, we have no plans at this time to change the location of our major manufacturing facilities around the world.

In addition, we have taken a number of steps to further protect our facilities from potential future disasters. Couple this with the proactive planning that is ongoing with both our 3PL partners and our material suppliers, and we believe that Seagate will be well positioned to respond to future disruptive occurrences.

Baljko: Generally speaking, what are some of the challenges and opportunities of doing business in emerging markets?

Mosley: Seagate has a global leadership presence in the information storage industry. We are a major participant in all geographies. With the rapid expansion of the Asian economies, especially China and India, there is an enhanced focus on that part of the world. But the same can be said for other fast expanding economies such as in Brazil, Russia, and the Middle East.

Each of these geographic regions presents its own special issues that need to be addressed. Oftentimes, there are legal or customs issues that may be unique to a region. Again, in those cases we ask our partners to help us find the most optimal solution to the problem at hand. We also see that in faster growing economies, more so than in the more mature ones, changes in demand are more frequent and lead times may be shorter. That may require us to use more airfreight to satisfy customer demand requirements. At the same time, we see that in the more established markets demand is more predictable, making it amenable to alternative methods of product movement.

Ultimately, we have found that no one solution is appropriate for any region and that a full battery of logistics offerings must be available to our company at all times. That is why we are constantly focused on improving on what we call our “fast execution network,” involving our customers and our logistics partners in evolutionary and revolutionary fulfillment change.

Baljko: Specifically regarding Thailand, what are the challenges and opportunities of doing business here?

Mosley: There are a number of reasons to locate some portion of our Asian manufacturing footprint in Thailand. In addition to a very dedicated workforce, along with the co-location of many suppliers, there is also the ease of moving freight into and out of the country. Both from a customs clearance perspective as well as from a cost perspective, there are many advantages to having Thailand be a major center of manufacturing expertise.

Also, as we saw last year, the Thai people are very resilient. They were able to overcome the negative effects of the flooding much faster than had been anticipated. Couple this with a government that is interested in improving the country's infrastructure and the productivity of its workforce, and you have an environment where common objectives can be focused on and realized.

15 comments on “Seagate Unfolds Strategy for Emerging Markets

  1. Houngbo_Hospice
    August 27, 2012

    ” Seagate's continued commitment to exploring business opportunities in emerging economies “

    There are a lot of opportunities in the emerging markets that manufacturers can still explore. It makes sense that Seagate as a global leader, want to expend its business to other emerging economies. 

  2. stochastic excursion
    August 27, 2012

    Mosley cites the government's commitment to playing a role in the recovery of the electronics sector there.  This type of strategy has led to success in the growth of high-tech in the Pacific rim and will no doubt further Thailand's recovery.

  3. elctrnx_lyf
    August 27, 2012

    The big companies needs confidence of government and dedicated labor force to actually setup any manufacturing footprint in emerging markets. They also look for the complete Eco system of different suppliers to simplify the supply chain management. Mosley has said it right and surely they try to establish themselves in India during next three years.

  4. SP
    August 28, 2012

    Emerging regions have problems of their own. But its not easy for the manufactrer to shift its base all of a sudden. After all lot of money and time has gone in building up the infrastructure in these regions. Like in India what happened to Tata's when their SIngur plant was forced to be shifted due to political influences or what happened to Maruti Suzuki plant in Gurgaon due to labor violence. Its a tough situation but I guess then none of the manufacturer would like to move away. They rather would like to face the sitaution and win over.

  5. Wale Bakare
    August 28, 2012

    I agree with your assertion but every region on earth faces with challenges of different forms – so also all make the world grow better and develop. Be it recession, poverty/austerity, natural disasters are challenges world is facing.

  6. Himanshugupta
    August 28, 2012

    I recently read that western companies are planning to cut offshore manufacturing due to complex supply chain, increasing labor cost and political pressure. Tata's case is different as this is limited to one region only. I would rather see Tata's case as an example of how manufacturing will shift from one region to another if there is not enough policy and political support. 

  7. Anna Young
    August 28, 2012

    It's apparent Seagate is undeterred by Thailand's flood disaster which affected the company last year. Seagate like many other technological and manufacturing industries has realized business potentials and growth in this region and are willing to forge ahead despite challenges. Good on them.

  8. Anna Young
    August 28, 2012

    @ stochastic,I agree. This sort of strategy coupled with the government backing will sure aid Thailand's recovery and will economically benefit Seagate too.

  9. syedzunair
    August 29, 2012

    Anna: 

    Attitude is what matters the most for manufacturing concerns. You should be prepared and willing to move forward after a disaster and that is what differentiates good companies from the rest. Seagate is doing a great job in trying to expand business in this region and their attitude is commendable. 

  10. syedzunair
    August 29, 2012

    elctrnx_lyf:

    There are many factors that are considered before actually setting up a manufacturing unit. Economic, political and infrastructural factors are always taken into consideration. Apart from these factors any other incentives from the Government like tax breaks etc further help to convince the manufacturer to come to a certain region. 

  11. syedzunair
    August 29, 2012

    Wale: 

    There will be challenges any where you go in the world. The thing is some of them will be foreseen and others will be unforeseen. The firms can mitigate risks that are foreseen while the unforeseen ones like floods, earthquakes etc cannot be mitigated unless they actually occur. Yes, you can plan for safety precautions and instill practices that will yield a minimum loss to the firm but there will be some kind of impact because of natural disasters. The key point is to get going again once you hit a roadblock! 

  12. Anna Young
    August 29, 2012

    @ Syedzunair, you're spot on. Seagate' strategy to cope after the disaster is what separates the wheat from the chaff so to say.

  13. syedzunair
    August 30, 2012

    Thanks Anna. Lets just hope they continue with the current tradition and forget any natural disasters or calamities that have struck them in the past. 

  14. Anna Young
    August 31, 2012

    @wale, I understand your point. In effect it confirms this song by Kelly Clarkson- “what doesn't kill you makes you stronger” Isn't? I suppose it's the right thing for Seagate to do – planning, streamlining and strategy to cope and forge ahead despite its challenges.

  15. t.alex
    September 1, 2012

    I am curious if Seagate builds any backup facilities in other parts of Thailand or other parts of Asia ?

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