Isuzu to Slash Jobs in Debt-Reduction Plan
Isuzu Motors Ltd., one of Japan’s top truck makers and an affiliate of General Motors Corp., unveiled an ambitious plan Thursday to pare its work force by 4,000 people, slash its heavy debts and boost profitability.
Battered by tumbling truck sales and a money-losing domestic dealer network, Isuzu disclosed its plans less than a week after GM, the world’s No. 1 auto maker, said it would inject an added $452 million into the company by buying new shares.
“Our debt-equity ratio is a very serious problem,” Isuzu Chairman Kazuhira Seki told a news conference. “We can’t solve our problems simply by expanding our business with General Motors. We needed to carry out radical reforms.”
The company said it aims to cut $2.68 billion, or 30%, from its consolidated interest-bearing debt and to sell $862 million in assets by March 2000. It also plans to shed one-tenth of its work force of 40,000 by that time, largely through attrition and cutbacks in contract workers.
The plan took particular aim at the truck maker’s domestic dealerships, 70% of which were expected to post a loss for the fiscal year ending in March.
“The biggest problem is our dealership network,” Seki said. “The organization hasn’t changed since it was set up 40 years ago.”
Isuzu will cut the number of domestic dealerships by more than half during the next three years, while expanding its network of service centers.
The company also will begin exporting one-ton pickup trucks to Australia from its Thai factory in mid-1999 and will move all of its pickup production to Thailand from Japan within the next three years.
“Except for Indonesia, I think Southeast Asia has hit bottom and may recover more quickly than Japan, although the situation right now is quite bad,” Seki said.
He added that Isuzu had already cut its Southeast Asian work force by half.
He was cautiously optimistic about Japan’s heavy-duty truck market, which shrank an estimated 37% this year to 95,000 units, according to industry data.
“There’s a whiff of slight movement, but I don’t know if it’s going to last,” he said. “I think the mood has changed quite a bit, but we haven’t incorporated this into our figures.”
Seki rejected a reporter’s suggestion that the restructuring may have been a quid pro quo for GM’s additional investment in Isuzu, which will raise the U.S. auto maker’s stake to 49% from 37.5%.
“[The two announcements] have absolutely nothing to do with each other,” he said. “We have not yet discussed our plans at all with GM, although we will do so if necessary.”
