JCY to cut 5,000 jobs over next 3 to 5 years

KUALA LUMPUR: JCY International Bhd plans to cut its labour force in Malaysia from 14,000 to 9,000 over the next three to five years as part of its strategy to be cost efficient in the long run.
Executive director Datuk James Wong (pix) said labour cost is the group's biggest challenge as it makes up 27% of its total costs.
"'If we successfully reduce our workforce by 5,000 over the next three to five years, potentially our savings on labour cost can be RM100 million per year," he told reporters after a media and analyst briefing here yesterday.
"5,000 (workforce reduction) is a major achievement if I can do it. Looking forward, this (labour) is one the things that we have to address," said Wong.
JCY has a total labour force of 19,000 worldwide, with manufacturing facilities in Johor, Malacca and Penang, as well as in Thailand and China. It also plans to cut workers in its overseas markets.
With the cut in labour force, the group will continue to automate its production process and reduce reliance on manual workers, with a planned capital expenditure (capex) of RM200 million to RM300 million over the next five years.
He said the average capex each year is RM50 million to RM60 million but if it accelerates on automation, capex may even hit RM100 million.
JCY is one of the largest global precision engineering manufacturers of hard disc drive (HDD) mechanical components. As a multi-component manufacturer, it produces base plates, actuator pivot flex assemblies, top cover assemblies and antidiscs. It supplies components to Western Digital, Seagate and Toshiba.
Meanwhile, he said JCY is on the constant lookout for an acquisition target.
"The industry goes through consolidation. Inevitably, there are people or bankers approaching us. We're the only one (multi-component manufacturer) with a cash surplus so we're the most likely candidate to do some acquisition," said Wong.
He said although original design manufacturer shipment numbers continue to reveal softness in PC builds, enterprise shipments are expected to recover in the second half of the year on increased demand from traditional storage/server vendors as well as hyperscale companies.
The start of the sale of Sony Playstation 4 in China by end-March 2015 and the prospective PC refresh cycle resulting from Windows 10, may help to improve HDD shipments for the second half of 2015, Wong said. The demand for cloud infrastructure and enterprise applications will continue to make up for the reduction in PC shipments.
"This industry is a matured industry and there are only a few players left and we should be able to maintain our profitability," he said.