IBM to close Hungarian hard drive plant

IBM WILL OFFICIALLY officially close a hard drive plant in Hungary by the end of November, "due to weak global demand", it was revealed today.

Our sources, however, reveal that the real reason for the Hungary pullout is because of extremely poor quality, and major product control and quality control failures.

This comes as no real surprise to Inquirer readers, as we've reported on the many problems IBM has had starting with their 75GXP line of drives (see the large list below). Problems have continued to mount over the years, and all fingers were pointing to the Székesfehérvár plant 60 km (37 miles) southwest of Budapest.

IBM Hungary is the country's second-biggest exporter, with revenues of 543.8 billion forints ($2.19 billion) in 2001. Its division IBM Storage Products Ltd. is based mainly in Székesfehérvár, where the drives are produced, but also has a manufacturing plant in Vác, where the Shark storage systems are produced for IBM, which will still have other service subsidiaries in Hungary.

According to the MTI news agency, 2,100 jobs would be eliminated. Also, 1,600 contract workers would lose their jobs, many of them Slovaks. IBM has already cut about 200 IBM jobs and 800 contractor jobs back in July. These are the biggest round of job cuts in Hungary by a foreign investor since a post-communist investment boom.

Hungarian government spokesperson Zoltan Gal referred to a letter the head of IBM Storage had written to Prime Minister Peter Medgyessy to let him know "the plant was being closed due to weak international demand". How comforting that must've been.

IBM has over 15,000 people employed in its hard drive division at plants in Singapore, Thailand, Japan, Hungary, Germany, Mexico and Hungary. This is down significantly from the 18,000 employed earlier this year.

IBM is also making another 700 jobs worldwide redundant. Approximately 100 of those jobs are from its hard drive operations elsewhere, and about 600 jobs in its services division. However, the cuts represent less than one percent of IBM's workforce of 305,000, down from 320,000 at the end of 2001.

Apparently, IBM's deal to sell its storage assets to Hitachi Ltd. for $2.05 billion is still good. Perhaps Hitachi didn't want to inherit IBM's problem child.

It is truly sad to see IBM Storage, once the bastion of quality and legendary reliability, go down in flames because of poor quality at one plant. µ

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