Hi! Managers: A perspective on growth opportunities in Asia

Seagate is the worldwide leader in the design, manufacture and marketing of hard disk drives and storage solutions, providing products for a wide range of applications. These storage solutions enable our digital lifestyle - allowing us to store music, movies and information. A state-of-the-art 2.5-inch portable 500GB drive that we hold in the palm of our hand contains 4 trillion bits of information (ones and zeros in digital speak). It's a technology-intensive and cost-sensitive industry. Success depends on technical and operational leadership.

We have had a significant presence in Asia, Thailand included, for over 25 years, investing in human resources, infrastructure and supplier development. In many respects, our growth and transition in Thailand exemplifies the logical progression one would expect.

Phase 1 was primarily about inexpensive direct labour. The end-product manufacturing was done in Asia, but the tooling and materials were imported, as the underlying infrastructure was still immature.

Phase 2 expanded the end-product manufacturing to include local fabrication of key tooling, equipment and supplies, but the key direct materials were still imported.

Phase 3 completed the localisation of the manufacturing infrastructure. The end-product, tooling and equipment manufacturing was expanded to include local supply for the key direct materials.

The driver for this transition was cost reduction, through inexpensive labour It occurred over many years, even decades, requiring effective collaboration between the government, the company, small and medium-sized enterprises and universities.

Today, Thailand is the larg-est hard-rive data-storage producer in the world, with several end-product suppliers and a reasonably strong supply chain.

But what's the future? The reality is that Thailand's economy has expanded and the standard of living increased. It is no longer the lowest-cost labour site. So promoting growth solely on the basis of less expensive production labour will have a limited horizon.

Thailand's labour rates are still competitive, but the next frontier in the maturation pro-cess relates to the development, build and support of the products. That is not just about in-expensive labour; it's about a blend of three main elements: technical and leadership talent, supplier infrastructure and reasonable labour rates for both direct and professional employees.

Many countries are embracing the transition beyond manufacturing. Continued collaboration between the government, universities and industry is required, but it must be tailored to the value addition desired in the future.

Jeffrey D Nygaard is vice president & country manager of Seagate Technology. Follow his articles every fourth Monday in the month.