JAPANESE electronics maker Hitachi trimming 4 percent of global work force
Tuesday, September 4th 2001, 12:00 am
By: News On 6
TOKYO (AP) _ Electronics maker Hitachi expects to lose more than $1 billion this year amid the worldwide economic downturn and is slashing 14,700 jobs, or 4.3 percent of its work force, to cut costs.
The job cuts announced Friday are the latest in a series of similar moves by Hitachi's rivals _ Toshiba Corp., NEC Corp. and Fujitsu Ltd.
For decades, Japan has relied on export-oriented production to bolster economic growth. That formula is clearly no longer working.
The rest of Asia with its cheaper labor is beating the Japanese in pricing at a time when key products like computer chips and displays are plunging in prices. Electronics makers here have been hard hit by dipping demand in the United States and elsewhere.
Hitachi also said it expects to post a loss of 140 billion yen ($1.2 billion) instead of the profit of 90 billion yen ($757 million) it had projected earlier.
Along with job cuts, Hitachi and other companies are offering revival plans.
The plans sound good on paper, but the companies have failed to move beyond the old all-around production approach, said Takashi Mimura, analyst with Societe Generale Securities in Tokyo.
What's lacking across the board, he said, is a new vision for growth, a decision to focus on a specialty product or forge new ground that would give the companies an edge in an increasingly competitive market.
``The restructuring is merely about stopping a further bleeding in cash,'' Mimura said. ``The way things are they're doomed to be a declining industry.''
Prospects for Japan's future are disturbing. Accustomed to stable growth and lifetime employment, this nation has never had to provide for a mobile work force or encourage managerial innovation.
Although unemployment in Japan is still lower than some parts of Europe, it is now at a record high 5 percent, above the U.S. rate of 4.5 percent. The main index for the Tokyo stock market is at a 17-year low.
The companies' plans _ although unusually decisive by Japanese standards _ underline another deeply rooted problem: No layoffs for Japanese workers. Big-name companies are expected to provide jobs for life in this country.
Companies like Fujitsu and Kyocera Corp., a Kyoto-based ceramics and electronics parts maker, are opting to cut overseas jobs. Earlier this week, Kyocera announced job cuts of 10,000, or 20 percent of its work force, but none in Japan.
Toshiba is slashing 17,000 jobs, or about 9 percent of its work force. NEC is shedding 4,000 jobs.
Hitachi is slashing 10,200 jobs here, but 7,200 will be through attrition _ failing to replace people who would have left anyway. Three thousand will quit through early retirement programs.
Most of Hitachi's 4,500 overseas job losses will be in Asia, centered on the closing of three plants _ two in Singapore, affecting 2,600 workers, and one in Malaysia employing 550 people. Hitachi refused to give the regional breakdown of other planned job cuts.
Reflecting widespread sentiment in Japan, Hitachi officials explaining the revival plan stressed that dismal corporate performance should never immediately hurt jobs.
In an attempt to cut costs, Hitachi will stop making cathode-ray tubes used in personal computer monitors and more than halve its investment in its semiconductor business to 60 billion yen ($505 million) from the planned 140 billion yen ($1 billion). It took a loss of 80 billion yen ($673 million) as a restructuring cost for this fiscal year.
``The possibility for economic recovery is extremely difficult to read,'' President Etsuhiko Shoyama told reporters. ``We cannot hope for positive change anytime soon.''