Compaq is planning to retrench more than 61 per cent of its work force here, or 1600 staff, at its manufacturing plant at Yishun.
The layoffs are the result of a drive to make Compaq's supply chain operations more efficient by outsourcing the vendor's Singapore PCB (printed circuit board) assembly operation to third-party companies, according to a company spokeswoman. Saving money was not the primary reason for the job cuts, she added.
Compaq plans to stagger the layoffs, with the first 500 job cuts starting in October and the remaining by March next year, the spokeswoman said. All employees will be given one month's notice and severance pay will be "above the market norm", according to an internal staff memo made public last week from Wong King Yoong, vice president and managing director, Compaq Asia.
The company is mulling over the idea of selling off the plant and its equipment to a contract manufacturer, a plan that could secure some of the affected jobs, the memo said.
Job cuts are part of Compaq's strategy to substantially simplify and shorten its supply chain operation, with the aim of making the company able to better respond to regional configure-to-order customer requests, the Compaq spokeswoman said. At present, the Yishun facility makes all of Compaq's Intel high-end server motherboards, she said, a somewhat inefficient situation given that more than 90 per cent of those boards are then shipped to the company's other configuration centres in the US and Scotland.
Compaq will carry on its Alpha-based PCB assembly manufacturing operations in its plant at Ayr in Scotland, according to an internal company memo from Ed Straw, senior vice president, supply chain management at Compaq.
Compaq has been through tough times this year. Last month, it posted a $US184 million loss in its most recent financial quarter, ended June 30 1999, and announced plans to cut its global workforce of around 70,000 people by between 6000 and 8000 staff.