Iomega axes but won't exit Asia

As Iomega Corp prepares to cut 380 positions in Asia Pacific, and amid massive restructuring, the company still maintains that it will stay put in Asia.
Written by Fran Foo, Contributor on
SINGAPORE--As Iomega Corp prepares to cut 380 positions in Asia Pacific, and amid massive restructuring, the company still maintains that it will stay put in Asia.

Last week, Iomega said it planned to trim 38 percent, or 1,254 workers, from its 3,300 employees worldwide. The layoffs include the 800 to 1,100 job cuts announced July 19, Iomega spokesperson Chris Romoser said.

But retrenchments in the region began even before the company made an official announcement last week. Iomega had been quietly slashing costs across the board, sources said.

In Singapore, its three-storey office has since shrunk to one floor and in a hush-hush move this January, Iomega finally pulled the plug on its Korean operations, sources said.

"The Korean market has been loss-making (for Iomega) for so many quarters...guess the time finally came," one source said. However, to maintain its presence in the Korean market, Iomega has appointed Digisys as its sole distributor.

And despite Australia being one of its better performers, it did not escape the ax. It is learnt that the firm issued pink slips to all but three employees in a blistering restructuring exercise. An Iomega Asia Pacific spokesperson confirmed this but declined to reveal the original number of employees.

There were similar cuts in Japan and China, sources said. "Australia and India are the only profitable markets; Japan, China and Korea have been bleeding heavily," one source said. "Compounded with Chinese consumers being too price-conscious, Iomega has always had problems breaking into the Chinese enterprise sector."

"And in Japan, Iomega's biggest hurdle--like for most multi-nationals--has always been getting mindshare from locals as they're so nationalistic," the source added.

Meanwhile, the company had said last week that it hopes to streamline its supply chain and logistics infrastructure, and channel labor-intensive tasks to Malaysia.

Since 1997, Iomega's manufacturing facility in Penang, Malaysia, has functioned as its principal worldwide manufacturing center.

The plant currently has 1,132 employees. Company officials declined to reveal its output capacity. In June, Iomega closed its Roy, Utah facility which resulted in 110 jobs losses.

Industry watchers and analysts have highlighted the possibility that Iomega could shut its Singapore office and run the business from Penang. To this, Iomega country director (Asia South, Hong Kong and China) Richard Lim said: "This is speculation by analysts. We will be keeping our Singapore office as our Asia Pacific headquarters."

NYSE-listed Iomega recently reported a net loss of US$35.9 million compared with US$40.4 million a year ago. In June, its CEO Bruce Albertson was replaced by Werner Heid while its Asia Pacific chief Bobby Choonavala was succeeded by James Payne last November.

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