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Sony may close factory in Japan

SONY is considering consolidating its television set operation by eliminating production at one of its two factories in Japan, a company official said today, amid speculation the company is falling into its first annual operating loss in 14 years.

Sony Corp. is also drawing up a plan to cut some 2,000 Japan-based employees, mostly through attrition, as part of the 8,000 global staff cuts the company had already announced, the Nikkei business newspaper reported today.

Sony Corp. spokesman Shusuke Kanai said the company is considering a plan to integrate TV assembly and production at the Inazawa factory in central Japan, one of the two Sony TV factories in the country. Sony has not decided whether to shut down the other one or use it for other purposes, he said in a telephone interview.

Kanai declined to confirm the reported staff cuts and other measures, including eliminating several factories globally and scaling down investment by one-third. He said Sony plans to announce further details at a news conference later today.

Analysts have said Sony is sinking into its first yearly operating loss in 14 years as sales fizzle for digital cameras, flat-panel TVs and other gadgets take a hammering from the global recession and a soaring yen.

The Nikkei last week said Sony was expected to rack up a 100 billion yen (US$1.1 billion) operating loss this fiscal year ending March, its first since 1995.

According to The Nikkei, Sony is looking at using one of the two TV factories for distribution and other purposes. It would be the first time Sony restructures its domestic manufacturing base since 2006, when it shut down a portable music player plant near Tokyo.

Behind Sony's dismal forecast are faltering sales of liquid crystal display TVs and other gadgets, especially in the key US and European markets, the Nikkei said.

Sony's downturn highlights the pain even Japan's premier brands are suffering amid the global slowdown. The US financial meltdown has crushed spending on flat-panel TVs and other gadgets - Sony's mainstays. The credit crunch and consumer worries hit right ahead of the critical year-end holiday shopping season.

Barely a month ago, Toyota Motor Corp., the nation's top automaker, said it was expecting its first annual operating loss in 70 years.


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