Sony to cut 8,000 jobs and close plants amid downturn
Sony Corp. is slashing 4% of its worldwide workforce, reining in spending and shutting plants as it tries to ride out a looming worldwide recession that is battering Japan’s export-reliant manufacturers.
The Tokyo company, which is cutting 8,000 of its 185,000 jobs, said Tuesday that it would shut five or six plants -- about 10% of its 57 factories. Sony also plans to reduce its electronics investments by about one-third by the end of March 2010. It did not give specific numbers.
The job cuts are a bad twist for Sony, which has been recovering from internal problems in recent years under a cost-cutting overhaul led by Chief Executive Howard Stringer.
“This may mean that Sony is now back at square one,” said Kazuharu Miura, electronics analyst at Daiwa Institute of Research in Tokyo. “Japanese companies are all in trouble because of this unexpected worldwide slowdown.”
Sony said a plant in Dax, France, that makes tapes and other recording media would be among those closing, but it declined to list the others. The moves will deliver more than 100 billion yen (about $1.1 billion) in savings a year by March 2010, the company said.
The company’s announcement comes amid similar news from other Japanese manufacturers, which face plunging demand at home and abroad, as well as falling gadget prices and unfavorable currency fluctuations.
Sony is particularly vulnerable to the strong yen because about 80% of its sales come from overseas. The dollar has dropped to about 93 yen from 117 yen last year, eroding Sony’s foreign income.
Sony has adjusted production and lowered inventories, but tough times demand more drastic efforts, it contends. The cost-cutting plan includes postponing an investment to boost production of liquid-crystal-display TVs in Slovakia because of a plunge in European demand for flat-panel TVs.
Sony will also trim spending in semiconductors and will outsource a portion of the production it had planned for image sensors for mobile phones.
Apart from the 8,000 electronics job losses, Sony will cut at least 8,000 temporary jobs in the same sector by the end of March 2010, said Senior Vice President Naofumi Hara. He said temporary workers were not counted in the tally of Sony’s global workforce.
Sony usually can count on the year-end holiday shopping season to rake in sales of gadgets such as flat-panel TVs, Blu-ray disc players and game consoles. But consumer sentiment has been dashed by the financial meltdown. Hara said U.S. sales were holding up relatively well, but he acknowledged that product prices might have to be cut, especially in Europe, which would diminish profit margins.
Sony recently slashed its full-year earnings projection, citing weaker consumer demand and a stronger yen.
