Hitachi Ltd, Japan's biggest private employer, will slash 14,700 jobs, or about 4.5 percent of its workforce, joining a slew of electronics companies cutting costs as global demand slumps.
Tokyo-based Hitachi will cut 10,200 jobs in Japan -- 7,200 by attrition and 3,000 through early retirement -- and 4,500 overseas by March 2002 as it reorganizes its chip and computer display businesses, the company said. Toshiba Corp, Fujitsu Ltd and NEC Corp already announced job cuts.
Japanese electronics companies are joining global rivals in cutting jobs to weather slumping demand for everything from computers to chips that store data in mobile phones. Hitachi now expects a ?140 billion (US$1.2 billion) loss in the year ending March. The company will pare spending this year on chip equipment and plants by more than half compared with its original plan.
The size of the expected loss "is a shock to investors," said Kazuaki Otsuka, who helps manage ?4 billion in equities at ING Mutual Funds Management Co Investors "have taken job cuts at Hitachi as a given so it's not really a positive surprise."
Hitachi will take an ?80 billion charge, which also covers its planned withdrawal from the cathode ray tube business and the overhaul of its domestic chip business.
"We're in quite a tough situation right now," said Hitachi President Etsuhiko Shoyama. "We thought chip sales would pick up earlier but that's not the case."
Japan's major electronics makers announced a combined 65,000 job cuts this month amid expectations semiconductor sales will fall by a quarter this year. Hitachi shares fell 4.3 percent to ?974. The shares have declined 4 percent since the start of the year, beating the 30 percent drop in the 153-member TOPIX Electric Appliances Index.
Chip prices tumbled in one of the industry's worst years on record, hurting earnings at Hitachi and Toshiba, which make parts such as chips and displays in additional to finished products.
Semiconductor sales worldwide will plunge 26 percent this year, more than previously expected, because demand for computers and cell phones hasn't picked up, market researcher Dataquest Inc said earlier this month.
Casio Computer Co, which makes G-Shock watches and handheld PCs, and Sanyo Electric Co, the largest maker of mobile-phone batteries, today joined the growing list of Japanese companies squeezed by slumping demand and pressure to lower prices.
Casio said full-year profit will fall 79 percent short of estimates because of slower economic growth in Japan and overseas.
Customers are demanding to pay lower prices for parts, it said.
Sanyo Electric reduced its earnings forecast by 56 percent for the six months ending Sept. 30, citing slower sales of chips, batteries and electronics components.
The earnings revisions and the job losses at Hitachi add to a spreading sense of gloom among Japanese consumer-electronics makers, which have begun eliminating jobs and expect to post losses as an economic recovery fails to materialize. The Nikkei 225 stock average tumbled 1,000 points in August, falling below 11,000 for the first time since 1984.
"Demand for IT [information technology] products is slowing down severely and the slump is longer than expected," Hitachi's Shoyama said.
Through the job cuts and reorganization, Hitachi hopes to save ?130 billion a year, starting in the next fiscal year. The company also hopes to cut annual procurement costs by 20 percent within two years.
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