Sony to cut 8,000 jobs

December 9, 2008 6:56:38 AM PST
Sony is slashing 8,000 jobs, or 4 percent of its global work force, aiming to cut costs by $1.1 billion a year as an economic downturn and a stronger yen batter profits at the Japanese electronics maker. Sony Corp., which has 185,000 employees worldwide, said Tuesday it will complete the job cuts - all in the electronics sector - by the end of March 2010.

The company will close several plants, including one in Dax, France, cut investment in electronics and outsource some work. The moves will deliver more than 100 billion yen ($1.1 billion) in savings a year by March 2010, the company said.

The global financial crisis is hitting the U.S., European, Japanese and emerging nations' economies, said Senior Vice President Naofumi Hara.

"Now we are all facing a recession together," he said. "It is impossible to predict how much longer the situation will last."

Sony'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 currency fluctuations. But Sony's job cuts are Japan's biggest since the U.S. credit crunch hit over the summer.

Kazuharu Miura, electronics analyst at Daiwa Institute of Research in Tokyo, warned that the measures may not be enough to offset the damage from sliding profits.

"The entire high-tech market is being seriously hurt," Miura said. "Japanese companies are all in trouble because of this unexpected worldwide slowdown."

Sony - maker of the Walkman portable player and PlayStation 3 game console - is particularly vulnerable to the strong yen since about 80 percent of its sales come from overseas. The dollar has dropped to about 93 yen from 117 yen last year, eroding with it Sony's foreign income.

Hara said the ways the job cuts will be carried out will vary by country, but he did not provide a breakdown. Sony's electronics business employs about 160,000 workers. The company also has movie, video game and financial businesses.

Sony has adjusted production and lowered inventories, but tough times demand more drastic efforts, it said in a statement.

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.

"These initiatives are in response to the sudden and rapid changes in the global economic environment," Sony said.

Sony will end production at some plants, including one in France that makes tape and other recording media and will continue moving electronics production to lower-cost countries. Manufacturing sites will be reduced by about 10 percent, or five or six plants, from 57 today.

Sony will also trim spending in semiconductors, and will outsource a portion of the production it had planned for image sensors for mobile phones.

The cost of the job cuts and plant shutdowns will be disclosed next year when the company updates its forecast for the fiscal year, the company said.

Hara said Sony will reduce investment in electronics by 30 percent for the following fiscal year ending March 2010. But he said specific numbers and details had not been decided.

Apart from the 8,000 electronics job losses, Hara said Sony would cut at least 8,000 temporary jobs in the same sector by the end of March 2010. He said temporary workers are not counted in the tally of Sony's global work force.

Sony recently slashed its full-year earnings projection, citing weaker consumer demand and a stronger yen. For the fiscal year through March 2009, it is expecting a 150 billion yen ($1.5 billion) profit, down 59 percent from the previous year.

Hara said it was unclear whether a further revision will be needed for the current fiscal year.

Sony's July-September profit plunged 72 percent from a year earlier to 20.8 billion ($224 million).

The announcement came shortly after trading ended in Tokyo, where Sony shares rose 3.9 percent to 1,896 yen ($20).

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