Automaker Nissan has recently announced a plan to cut about 12,500 jobs—nearly 10 percent of the company’s global workforce—as a means to cut costs to support a turnaround effort at a time when profits are tumbling. According to the Japanese automaker, the plan also includes a cut to global production and model lineups, by as much as 10 percent, by the end of fiscal year 2022.
Specifically, Nissan Chief Executive Hiroto Saikawa said most of these job cuts will be among auto plant workers. That said, he did not provide any specific information regarding things like which regions might be affected; only that these job cuts are extremely necessary to reduce both global production capacity and overhead. While the company has not specifically named the regions that will be affected, Nissan has hinted that the cuts could include 6,400 jobs across eight-yet-unspecified locations by the end of this year. Another 6,100 job cuts can be expected by the end of fiscal year 2022.
The move comes, of course, as the brand is looking to recover from the arrest of the company’s former Chairman Carlos Ghosn. While he maintains his innocence, Ghosn is still waiting for trial in Japan over several financial misconduct allegations. In addition, the company has seen a decline in profitability from several years of sales incentives that consistently lowered margins.
Saikawa goes on to say that the Yokohama-based automaker expects sales will start to recover, but it is going to take a little time. Fortunately, some of their efforts towards recovery have already begun. He comments, “Our situation right now is extremely severe,” noting, specifically, that more attractive models are on the way in addition to new technological features (including artificial intelligence and zero emissions) to improve sales. He concludes, “Our stance to lead the industry is unchanging.”
In case you did not know, Nissan saw profit plummet in the April-June period. This sank profits by nearly 50 percent form the same quarter, last year; and quarterly sales are down 13 percent. More importantly, first-quarter operating profit dropped by more than 98 percent on the heels of struggling in the North American market. Of course, that is a key auto market where Nissan has already been hit hard by severe competition.