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Matsushita Electric plans to fire 1,600 in Singapore

Matsushita Electric Industrial Co will cut almost three-fourths of the Singapore workforce at one of its subsidiaries as it reduces production of hard-disk drives for personal computers.

Matsushita-Kotobuki Electronics Industries Ltd, 58 percent-owned by the world's largest consumer-electronics maker, said in a release that it will cut 1,600 of its 2,200 jobs in the island state. The discharged employees will receive compensation, it said.

The move will worsen unemployment in Singapore, which is emerging from last year's recession, the worst in 38 years.

Singapore's jobless rate rose to a three-year high of 4.5 percent in March as manufacturers such as Hitachi Ltd cut back because of last year's slump in electronics.

"There's no letting off in the pace of layoffs," said Suan Teck Kin, an economist at Oversea-Chinese Banking Corp in Singapore. "The second-quarter unemployment picture could be as bad as the first quarter, or worse."

Some manufacturers are leaving the island in search of cheaper production centers elsewhere. Seiko Epson Corp, which makes computer scanners in Singapore, said last month it would move production to Indonesia to lower costs. The company said it would cut 700 jobs in Singapore.

More than 85,000 residents were unemployed in March.

Matsushita-Kotobuki is one of the five units Matsushita Electric will absorb in October by swapping shares. The Matsushita group, which makes electronics under the Panasonic brand, posted a record loss of Japanese yen 431 billion (US$3.5 billion) in the year ended March 31 and is in the midst of a reorganization to cut costs.

Matsushita-Kotobuki and Maxtor Corp of the US agreed that the Japanese company will transfer its hard-disk drive production to Maxtor, which took over Quantum Corp.'s disk drive unit last year. Quantum was Matsushita-Kotobuki's main customer.
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