Japan's Hitachi said on Thursday it would close a parts factory in Mexico and cut 4,500 jobs as it aims to shave $300 million in costs in its loss-making hard disk drive business over the next five years.
Shares in Hitachi, Japan's largest electronics conglomerate, rose 5.4% to 899 yen by the midday break as investors cheered the steps. That compared with a 1.7% rise in the benchmark Nikkei average.
Hitachi, which bought IBM's disk drive operations in 2002 for $2 billion, said it aimed to boost hard drive sales by up to 40% in calendar 2007. It said sales volume may slow until June but it expects them to pick up in the second half.
It hopes to get its struggling hard drive business into the black in calendar 2007, Hitachi Global Storage Technologies CEO Hiroaki Nakanishi told a news conference.
"It will be a struggle against price falls, but we will aggressively push forward new products and cut costs to gain a profit," he said.
The Tokyo-based company said it would shut down a factory in Guadalajara, Mexico, by 2008, leading to a loss of 4,500 jobs or about 11% of the hard drive unit's global work force of 40,000, including both regular and part-time employees.
Hitachi expects extraordinary losses of close to $100 million from the planned closure.
The Mexico factory makes hard drive sliders, which hold the read/write head.
In turn, Hitachi said it would increase slider output at a factory in the Philippines as part of its efforts to boost efficiency by consolidating production and development.
The electronics company warned last week it would fall into a deeper parent-only loss for the business year ending on March 31 because of appraisal losses on its HDD operations due to steep falls in the prices of these devices.