When will the bad news end? When will these trends reverse? Everyone and their mother hopes it will be sooner rather than later.
Nissan is the latest major automaker to join the bandwagon, announcing they will cut 20,000 jobs, which is nearly one-tenth of their workforce. They are also announcing production cuts, inventory reductions and innovative work schedules to minimize the number of layoffs.
Nissan will post a loss for the first time in nine years, amounting to $2.9 billion through March. The dollar value of the losses for major automakers this year and last are staggering sums. The only figures larger are those bantered about in the halls of the US Congess for the upcoming stimulus bill.
From Yahoo News:
Nissan is slashing 20,000 jobs, or 8.5 percent of its global work force, to cope with what Japan's third-largest automaker expects will be its first annual loss in nine years.
"The global auto industry is in turmoil, and Nissan is no exception," Chief Executive Carlos Ghosn told reporters Monday in Tokyo.
Nissan Motor Co. 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.
The last time Nissan racked up an annual net loss was for the fiscal year ended March 2000, at the start of its alliance with Renault SA of France, which sent in Ghosn to rescue Nissan from the brink of collapse. Then, a bloated Nissan had lost money in seven of the previous eight years.
Ghosn, now also chief executive at Renault, said the troubles back then had been limited to Nissan but no automaker has been spared from the global economic slump.
"In 1999, we were alone. In 2009, everybody is suffering," he said.
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. That was its first quarterly net loss since it began reporting quarterly earnings in 2003.
Like other Japanese automakers, Nissan has been battered by the global slump, which has undermined sales in its vital North American market. A strong yen also ate into profits by eroding overseas earnings when converted back to yen.
As a key step in weathering the downturn, Ghosn said Nissan's global work force will be reduced by 20,000 through March 2010, to 215,000. Of the job cuts, 12,000 will be in Japan, including group companies, and the rest will be overseas, it said. The company did not give a further regional breakdown.
Mamoru Katou, analyst with Tokai Tokyo Research, remained pessimistic about Nissan's recovery prospects.
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.
Toyota and Honda, which both have gas-electric hybrids going on sale this year, are also better positioned to boost sales when the recovery kicks in, he said. Nissan does not have a comparable hybrid model.
Ghosn said hiring will become minimal, contracts for temporary workers will be ended and the company is offering early retirement packages.
Tokyo-based Nissan has already reduced its temporary plant workers in Japan by about 2,000, 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. It also has work stoppages in Spain.
Japanese rival 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's directors on the board will forgo bonus pay for the year ending March. Their salaries, as well as the salaries of corporate officers, will be reduced by 10 percent, while managers' salaries will be reduced by 5 percent.
Nissan will also negotiate a "work-sharing" scheme with the unions, Ghosn said.
In work-sharing, an employee's work load gets doled out to two or more employees, but they also must take a pay cut. The effort allows troubled companies to avoid layoffs while adjusting to plunging production. The benefits are that skilled staff aren't lost and the arrangement can be quickly dropped, allowing production to be ramped up without delay, once the industry recovers.
"You'd be ready to restart immediately when the crisis is over," said Ghosn.
He said he was interested in changing to a four-day week from a five-day week, while reducing compensation per worker, and that was better than cutting jobs.
Among other measures, production will be reduced and inventory will be controlled, according to Nissan.
Shift elimination, work stoppages and shorter hours will help reduce global production by 20 percent, or 787,000 vehicles, from the initial plan, by the end of this fiscal year, it said.
Inventory is being reduced by 20 percent to 480,000 vehicles from 630,000 in March 2008, Nissan said.
Nissan sold 731,000 vehicles worldwide in the quarter ended Dec. 31, down 18.6 percent from 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.
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