Nissan to cut factory workers in Tennessee
In a rare move for a major Japanese automaker in the U.S., Nissan Motor Co. said Tuesday that it was offering a cash buyout to employees as it adjusts the product mix at its two Tennessee manufacturing plants.
The company said improved manufacturing efficiencies also led it to offer the plan to cut about 300 of 6,200 jobs at the factories. Analysts cautioned against reading the move as a sign of trouble.
For the record:
12:00 AM, Feb. 22, 2007 For The Record
Los Angeles Times Thursday February 22, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 50 words Type of Material: Correction
Nissan employee buyouts: An article in Wednesday’s Business section about an employee buyout offer by Nissan Motor Co. said another Japanese automaker, Honda Motor Co., had offered a buyout in 2004 at its Georgetown, Ky., assembly plant. That buyout was offered by Toyota Motor Corp., which operates the plant there.
“This is no big deal,” said Ken Elias, a Scottsdale, Ariz.-based partner at independent consulting firm Maryann Keller & Associates. “They have found some production efficiencies and they need to cut” payroll to take advantage of them.
Nissan Chairman Carlos Ghosn recently cited a slump in U.S. sales, especially in sport utility vehicles and pickup trucks, as one reason the company’s global profit was likely to fall this year after six successive annual increases.
Nissan North America executives explain the buyout program as an attempt to align manpower with a production shift to more passenger cars and related parts and a scaling back of truck capacity.
Of the 6,200 Tennessee manufacturing employees, 1,000 work at the company’s engine plant in Decherd and 5,200 work at Smyrna, where Nissan builds Altima and Maxima passenger cars, Frontier small pickups and Pathfinder and Xterra SUVs.
Although a cash buyout is a first for Nissan, in 1998 the company offered enhanced pensions to manufacturing employees who agreed to retire, a plan that enabled it to trim 66 jobs at the Smyrna plant.
Honda Motor Co. offered a buyout in 2004 at its Georgetown, Ky., assembly plant, cutting about 150 jobs, and Honda and Toyota Motor Corp. have in the past offered “sweeteners” to retirement-eligible employees to help trim payrolls.
Nissan hasn’t been shy about taking more dramatic steps to cut costs to remain competitive in the rapidly changing auto industry. It recently closed its North American headquarters in Gardena and moved it and about 1,000 jobs to Nashville to be closer to its manufacturing operations and to save millions of dollars in annual operating costs.
And it was about a year ago that Nissan became the first Japanese automaker to reduce retiree healthcare benefits in the U.S. That action was taken, the company said, to help it remain competitive in the rapidly changing U.S. environment.
At the time, General Motors Corp. and Ford Motor Co. had begun slashing payrolls and benefits under major restructurings. Chrysler Group has since followed suit, last week announcing plans to cut its North American payroll by 16%.
Nissan said it would pay Tennessee manufacturing workers $45,000 plus $500 for each year of service to quit their jobs. No other Nissan workers are eligible for the offer. It said it expected about 300 workers to accept the offer but would accept more than that if others wanted to leave.