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Nissan to cut 20,000 workers

By Makiko Kitamura | February 10, 2009, Tuesday | Print Edition

NISSAN Motor Co, Japan's third-largest vehicle maker, said that it will slash 20,000 jobs and post its first loss in nine years as the global recession cripples car demand and the stronger yen ravages overseas earnings.

The company expects a net loss of 265 billion yen (US$2.91 billion) for the year ending March 31, compared with its October estimate of 160 billion yen in net income.

Nissan's sales in the United States, its biggest market, plunged 31 percent in January. Chief Executive Carlos Ghosn's plans to cut 9 percent of its work force caps a month in which all of Japan's car makers slashed forecasts and Panasonic Corp and NEC Corp cut workers.

"The economic storm is wreaking havoc on everyone," said Yuuki Sakurai, from Fukoku Mutual Life Insurance Co. "And things could get even worse."

Japanese vehicle sales fell the most in 35 years last month. The country is headed for its worst post-war recession as factory output slumped in December and unemployment surged.

"Our worst assumptions on the state of the global economy have been met or exceeded," said Ghosn.

The car maker will cut its workforce from 235,000 to 215,000, matching the magnitude of cuts announced by NEC last month. Of the job losses, 60 percent will be in Japan.

"Japan has been used to a private social contract between the biggest companies and their employees," said Martin Schulz, from Fujitsu Research Institute in Tokyo. "That social contract is basically being broken."

Nissan is also talking to unions about shortening the work week to four days. The company will scale back new model introductions to 48 from a previously planned 60.

Ghosn led Nissan's recovery in 1999 and 2000 after the car maker had a record 684 billion yen loss. He eliminated 21,000 jobs and closed four plants, putting the car maker on the path to six years of profit growth. This time it's far harder.

"In 1999 Nissan had a crisis," Ghosn said. "Today everyone has a problem. The financial crisis was supposed to be solved by now and it's not."

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