Nissan Motor Company is said to be cutting another 11,000 jobs globally, its overall workforce cut to about 20,000 jobs, Japan’s public broadcaster NHK reported.
The Japanese carmaker will make these radical reductions as part of its quarterly earnings announcement on Tuesday, a major extension of its already announced restructuring plans. If confirmed, the layoffs would be approximately 15% of Nissan’s worldwide employees.
The carmaker last November already laid out plans to cut 9,000 posts after poor sales performance in major markets like the United States and China. The initial cuts followed Nissan’s reveal of a colossal 94% drop in first-half net income.
While Nissan itself has not yet officially responded to these recent reported lay-offs, the news follows on the heels of mounting amounts of financial pressure for the automaker, which employed more than 133,000 people as of last March.
Financial crisis worsens
Nissan is all set to release its year to March numbers on Tuesday. The news looks bleak, after the firm told shareholders it was likely to report a historic 700-750 billion yen ($4.74-$5.08 billion) loss due to impairment costs recently.
This money crisis has compelled Nissan to keep on lowering its profit expectations again and again, lowering its estimates four times in the latest financial year. Its poor performance has also prompted rating agencies to cut Nissan’s credit rating to junk status, and Moody’s especially attributes it to “weak profitability” and an “ageing model portfolio.”
Broader restructuring underway
The layoff is one of a larger restructuring initiative as Nissan responds to several issues in its international operations. Nissan had earlier established plans to cut its worldwide production capacity by 20% and had already announced it would shut down its Thai factory by June, with two other unidentified factories to be shut.
As a part of yet another cost-saving measure, Nissan recently abandoned proposals for a $1.1 billion electric vehicle battery factory on Japan’s Kyushu island, despite its eligibility for subsidies for the project.
Nissan’s woes are the result of a combination of factors that amount to a perfect storm for the carmaker. The carmaker has increasingly struggled to match Chinese homegrown electric carmakers in one of its key markets. Simultaneously, higher tariffs in the US have further reduced profit margins.
The firm also has heavy debt while implementing a costly business overhaul strategy. In the first half of the year, news of a possible merger with Honda didn’t work out, so Nissan has to struggle with its financial woes alone.
These developments come at a critical juncture for the global automotive sector, which is being fast transitioned to electrification against a backdrop of economic woes and supply chain disruptions.
As Nissan gets ready to report its annual results and perhaps sign off on these extra job cuts, industry players and analysts will be keenly looking for information on the company’s plan to get back into the black and its vision for growth in a more competitive era.
The magnitude of these reported losses suggests the gravity of Nissan’s crisis and promises that tough choices lie in store as the formerly dominant automaker struggles to stay afloat in a rapidly changing auto environment.
