Quantum is closing its Dundalk manufacturing repair plant in Ireland with the loss of 250 jobs.
It is a sad turnaround for the plant that just two years ago Quantum said it was looking to add 120 extra workers to the existing 280 people. Now the sacked workers will see their jobs going to cheaper Eastern Europe manufacturing plants. Dundalk is expected to close in 2006 with severance costs of between $8 million and $9 million and potential written-off inventory costs also.
According to Electricnews.net Quantum's Dundalk director Kevin Devlin said that Ireland's high costs were to blame for the company's decision to wind down.
What has happened since 2003 when expansion was the flavour of the year? LTO. Quantum chairman and CEO Rick Belluzzo is dealing with the problems caused by over-capacity in the tape product market and consolidation around the LTO format. This has meant that Quantum's own super-tape format, SDLT, has not delivered the hoped-for revenues. As a result Quantum has bought its way into the LTO consortium by acquiring Certance. Now Belluzzo's company deals with HP, where he ran the wildly successful printer division, and is just another johnny-come-lately LTO supplier.
The tape market has also been affected by the rise of disk-to-disk (D2D) backup technology which is imprisoning tape in the archive space with near-term backups, once held on tape, increasingly held on disk. Quantum has its own D2D products. D2D backup is enabling the spread of continuous data protection, further eroding tape's role. Longer term, holographic disk with fast random access could provide an alternative to tape that has tape's portability, longevity and low cost.
For Quantum, and other tape product suppliers, future growth could come mostly from growing market share in a shrinking commoditising market by having lower-cost products than the competition. High-cost manufacturing locations, such as the EEC, will be under continuing pressure.