Nissan to double global job cuts to over 10 000 - report

Published Jul 24, 2019

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Tokyo - Nissan plans to expand job cuts to over 10 000 to help turn around its

business, a person with direct knowledge of the matter said on

Wednesday, as profit continues to plunge while the carmaker

grapples with management upheaval.

The global plan includes the 4800 job cuts announced in May

and will mostly be at factories overseas with low utilisation

rates, the person said. It will be announced along with

financial results on Thursday, said the person, who declined to

be identified as the information was still private.

Nissan declined to comment on the job cuts. Its shares ended

the day up nearly 1.0%.

Analysts expect Nissan to post one of its weakest quarterly

performances since the 2008 global financial crisis when it

announces its first-quarter earnings on Thursday.

On Wednesday, the Nikkei business daily reported the

carmaker would report operating profit of "several billion yen"

for the quarter, around a 90% drop from a year

earlier. Analysts estimate a decline of 64%.

The job cuts, exceeding 7% of Nissan's 138 000-strong

workforce, come as Nissan struggles to improve dismal profit

margins in the United States, a key market where former Chairman

Carlos Ghosn for years pushed to aggressively grow market share

during his time as chief executive.

Years of heavy discounting to grow sales in the world's

second-biggest car market have left Nissan with falling demand

for the Altima sedan and other models, a cheapened brand image

and low resale values, while the costs to offer high discounts

have hit its bottom line.

The latest job cuts also highlight the extent of problems

facing Chief Executive Hiroto Saikawa, who is also grappling

with fractured relations with French alliance partner Renault SA

following the arrest of their shared former chairman.

Ghosn has been charged with financial misconduct and denies

wrongdoing.

Saikawa kept his job in a vote at an annual shareholders

meeting last month, though he had to fight off a rare rebuke by

top proxy advisory firms who urged shareholders not to reappoint

him considering he was groomed for leadership by Ghosn.

In May, Nissan forecast a 28% plunge in annual operating

profit, adding to a 45% fall in the previous year, putting the

automaker on course for its weakest earnings in 11 years.

While addressing faltering performance, Saikawa also has to

repair trust with Renault, which has deteriorated in past months

as the French automaker sought more control within Nissan.

Renault owns 43% of the Japanese carmaker, which in turn

holds a 15%, non-voting stake in its partner. Saikawa, who has

sought more equal footing with Renault, last month said Nissan

would postpone discussions on the alliance's future to

prioritise performance.

The extended job cuts were first reported by Kyodo late on

Tuesday.

Reuters

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