Nissan to slash 20,000 jobs and sees annual loss
Published 12:57 am Wednesday, February 11, 2009
Nissan announced 20,000 job cuts Monday, the deepest reduction among Japan’s automakers in battling the global downturn, as it forecast its first annual loss in nine years.
Chief Executive Carlos Ghosn said the latest problems were industrywide and due to the global economic slump and the appreciating yen. They didn’t mean Nissan Motor Co. was reverting to its money-losing status that required a bailout from alliance partner Renault SA in 1999, he said.
The last time Japan’s third-largest automaker racked up an annual net loss was for the fiscal year that ended March 2000. Then, a bloated Nissan had lost money in seven of the previous eight years.
“In 1999, we were alone. In 2009, everybody is suffering,” Ghosn, also chief executive at Renault, said at Nissan’s Tokyo headquarters.
Nissan now expects a 265 billion yen ($2.9 billion) net loss for the fiscal year through March — joining a raft of other Japanese corporate giants, including Toyota, Toshiba and Sony, in slashing jobs and projecting annual losses.
As a key step in weathering the downturn, Ghosn said Nissan will cut 20,000 jobs worldwide, or 8.5 percent of its 235,000-strong global work force, by March 2010.
Some 12,000 of the job cuts will be in Japan, including group companies, and the rest will be overseas. The company did not give a further regional breakdown.
The maker of the Z sports car and the March compact sank to a loss of 83.2 billion yen for the October-December period from a 132.2 billion yen profit a year earlier. Quarterly sales plunged 34.4 percent to 1.817 trillion yen.
Mamoru Katou, analyst with Tokai Tokyo Research, remained pessimistic about Nissan’s recovery prospects.
Toyota and Honda, which both have gas-electric hybrids going on sale this year, are better positioned to boost sales when the recovery kicks in, he said. Nissan does not have a comparable hybrid model.
Nissan’s job cuts in Japan — more aggressive than its domestic rivals — show its strategy to take production overseas and take advantage of the soaring yen but that would make the Nissan brand less popular in its home market, Katou said.
“The job cuts will hurt Japanese parts-makers, too, and in the long run diminish the Nissan brand value in Japan,” he said.
No. 1 automaker Toyota Motor Corp., which is projecting a 350 billion yen ($3.85 billion) net loss for the fiscal year through March, its first such loss since 1950, is reducing contract workers in Japan from 8,800 in June last year to 3,000 in March.
Honda Motor Co., Japan’s No. 2 automaker, is faring relatively better and is expecting to stay in the black, with a 80 billion yen ($879 million) profit, but it will cut the number of temporary workers at its Japan plants from 3,100 to zero by the end of April.
Nissan has already reduced its temporary plant workers in Japan by about 2,000 and slashed its British work force by 1,200 at its plant in Sunderland, northern England, where it had employed about 5,000 people. It has offered early retirement to 1,200 workers in the U.S., but that number will likely increase, according to Nissan.
Among other measures to cut costs, Nissan’s directors will forgo bonus pay for the year ending March. Their salaries, and the salaries of corporate officers, will be reduced by 10 percent. Salaries of managers will be reduced by 5 percent.
Ghosn said Nissan was looking into government funding around the world, including Japan, Europe and the U.S., to assist the auto sector ride out the crisis by helping secure financing or offering incentives to encourage sales.
“Governments are responding swiftly, one by one,” he said.
Shift elimination, work stoppages and shorter working hours will help reduce global production by 20 percent, or 787,000 vehicles, from the initial plan by the end of this fiscal year, the automaker said.
Inventory is being reduced by 20 percent to 480,000 vehicles from 630,000 in March 2008.
Nissan is also considering implementing “work-sharing” to have employees share their work load while taking pay cuts, Ghosn said. Nissan may change temporarily to a four-day week from a five-day week, while reducing compensation per worker, and that was better than cutting jobs, he said.
Nissan sold 731,000 vehicles worldwide in the quarter ending Dec. 31, down 18.6 percent from the same period a year earlier. Nissan’s vehicle sales suffered especially in the U.S., where they dropped 29.7 percent in January.
Nissan remains committed to developing electric vehicles and other zero-emission technology, Ghosn said.
“We don’t think this crisis is going to last forever,” he said.
Nissan shares slid 5.8 percent to 261 yen. Earnings were announced after trading ended in Tokyo.