Sony has announced that the company will eliminate 8,000 jobs and rein in planned investment as it reacts to the global economic slowdown.
Sony said Tuesday it would cut 8,000 jobs in reaction to sluggish sales, particularly of its televisions and digital cameras. That number comprises regular workers and represents 4 percent of Sony’s entire workforce. Sony also said it plans to reduce head count in its seasonal and temporary workforces. The move is aimed at slashing $1.1 billion in operational and investment costs. Sony’s investment in the electronics business will decrease by approximately 30 percent in the fiscal year ending March 31, 2010. That includes plans to cut investment expenditures this fiscal year by outsourcing part of the company’s proposed increase in the manufacturing of CMOS image sensors for use in mobile phones to third parties.
According to Sony, certain short-term measures have already been taken, including adjusting production, lowering inventory levels and reducing operational expenses. But the appreciation of the yen means that the Japanese manufacturer will need to adjust product pricing, downsize and realign domestic and overseas manufacturing sites, reallocate its workforce and reduce head count.
Sony’s moves will have global impact. For example, the company is postponing plans to invest in production expansion at the Nitra plant in Slovakia, which assembles LCD televisions for the European market. Further, the manufacturer plans to close two overseas manufacturing sites, including the Sony Dax Technology Center in France, which manufactures tape and other recording media. Overall, the total number of manufacturing sites will be reduced by roughly 10 percent, from the current total of 57, by March 31, 2010.
From the New York Times:
Sony, which had already announced scattered cost-savings measures, blamed the rapid deterioration in the global economic outlook and the strength of the Japanese currency for the cuts.
“These initiatives are in response to the sudden and rapid changes in the global economic environment,” Sony, which has 160,000 employees, said in a statement. Sony aims save more than 100 billion yen, or $1.1 billion, a year through the measures, which also include shutting several plants.
About 10 percent of the company’s 57 plants will be shut, including 2 overseas sites, and plans to expand a site in Slovakia where LCD televisions for the European market are assembled have been delayed. The statement did specify which plants will be closed.
Sony will also trim spending in semiconductors and will outsource a part of the production it had planned for image sensors for cellphones.
“Based on such measures, Sony is planning to reduce investment in the electronics business by approximately 30 percent” in the fiscal year ending March 2010, the company said.
The announcements highlight the extent of the pain many Asian exporters — especially in Japan — are facing as the global financial crisis deepens. Like other Japanese manufacturers, Sony has suffered from slowing consumer demand, aggravated by the yen’s rally against the dollar and the euro in recent months, which makes Japanese goods more expensive for consumers in the United States and Europe.