Sony Corp expects to weather the global economic slowdown without firing tens of thousands of workers like Japanese rivals because it is already cutting costs and has shut or closed many of its factories.
"We took those measures years ago," Kunitake Ando, said president of the second-largest consumer-electronics maker. "We don't need to rush a restructuring like others are doing in such a hurry."
Sony, which had 190,000 workers worldwide at the end of March last year, is resisting a tide of cuts that have claimed more than 60,000 jobs at electronics companies such as NEC Corp, Fujitsu Ltd and Toshiba Corp. They're joining global rivals trying to weather slumping demand for everything from computers to chips that store data in cellphones.
Granted, Sony plans to step up cost-cutting measures. Ando ordered his staff to outline "seven reorganization projects" after Sony's plant utilization failed to improve in the three months to June 30, he said.
"Production activity usually recovers in the first quarter [ended June 30] after a slow fourth quarter,'' Ando said. "But we didn't see any signs of a comeback this year." The cost-cutting measures are intended to accelerate Sony's withdrawal from unprofitable businesses and to cut spending on marketing products and purchasing electronic parts and components, Ando said. Sony hopes to achieve numerical targets faster than originally planned, he said.
Analysts and investors are skeptical Sony alone will be able to cope with slower global economic growth without taking more drastic efforts to trim costs, especially sales and management expenses.
Sony is struggling to remain profitable even as its consumer electronics business, which accounts for 75 percent of its sales, racks up losses.
The electronics division had an operating loss of ?807 million in the fiscal first quarter. Sony is also posting losses at its games business, which was once the company's main source of revenue and profits.
"It's too early for Sony to judge whether it can cope with the current slowdown" without eliminating large numbers of jobs, said Masahiko Ishino, an analyst with Tokyo-Mitsubishi Securities Co. "That decision is likely to come early next year after the third-quarter performance."
Sony had an unexpected loss in the three months ended June 30 as demand for televisions and mobile phones slumped, prompting the company to cut its annual forecast 40 percent and reduce spending. It expects a full-year profit of ?90 billion.
In the US, it may cut a number of jobs in its consumer electronics and music businesses, spokesman Kei Sakaguchi said. The US accounts for 30 percent of sales for Sony, whose products include the PlayStation2 video-game console and the Vaio series of PCs.
"There's a feeling right now that any company not outlining [restructuring measures] is a dropout,'' said Akira Hiramine, chief investment officer at Invesco Asset Management Ltd. "Sony is probably considering whether it needs to take a more defensive posture and back off" from releasing so many Internet-linked products.
Sony closed 13 manufacturing plants for electronics products worldwide since March 1999, reducing the number of those plants to 57. It has said it wants to shut a total of 15 by March 2003.
The company has 22 plants in Japan and trimmed about 4 percent of its workforce in the year ended March 31, bringing sales per employee to about ?40 million. Matsushita Electric Industrial Co, whose workforce is about one and a-half times Sony's, registers sales of ?26 million per employee.
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