Fujitsu plans to cut workers' pay

Fujitsu Ltd, which expects a record loss of US$2.3 billion this fiscal year, said it plans to cut by a third the hours worked by 5,000 employees at its chip plants in Japan to trim costs and avoid job cuts.

Workers at three plants in Iwate, Fukushima and Mie prefectures will be affected, Senior Executive Vice President Takashi Takaya said in an interview. The company is negotiating details of the work-sharing plan with labor unions, he said.

Fujitsu, which is slashing its workforce by 20,900 this fiscal year, is spending ?350 billion (US$2.6 billion) to cut jobs and reorganize its businesses.

Fujitsu's shares fell 43 percent last year as the chip industry suffered its worst year on record when makers of personal computers and other consumer electronics curtailed buying chips to work off their inventories.

"Fujitsu is trying many methods to cut labor costs because firing isn't an option in Japan," said Tetsuo Kawai, who helps manage ?3.5 trillion in assets at Daiwa SB Investments Ltd, which holds Fujitsu shares. "Wages are way too high in Japan."

Fujitsu expects its chip unit to post losses of ?50 billion in the year ending March 31. Worldwide, the chip industry saw sales plunge to a record low of US$120 billion last year. "The situation in the chip business will probably be harsh again this year," Fujitsu's Takaya said. "We've got to have options to cut our costs."

Fujitsu's shares fell as much as 1.7 percent to ?990, and were recently at 998. Led by Fujitsu, the TOPIX Electric Appliances Index fell as much as 0.5 percent in morning trade.

Other Japanese chipmakers, which have already tried to reduce their workforces in Japan by offering early retirement, may follow Fujitsu's example as a lingering slump in chip sales forces them to pare costs further, Kawai said.

Sales per employee at Fujitsu, Japan's biggest business computer maker, were US$218,275 in the year ended March 2001, compared with US$271,135 at NEC. IBM Corp. had sales of US$279,470 per employee in 2000.

Tokyo-based Fujitsu will propose to its labor union that workers at the three plants work eight-hour shifts every two days instead of the 12-hour shifts they currently work, Takaya said.

The work-sharing plan at Fujitsu's chip plants was earlier reported by the Nihon Keizai newspaper.

Fujitsu had 187,000 employees as of March last year.

Fujitsu will also offer workers the opportunity to take as much as one year off at partial pay, Takaya said. Fujitsu wants to pay workers who chose that option less than 90 percent of their full salary, he said.

Fujitsu is discussing the size of the salary cuts with the union representing the workers, Takaya said, adding the company hopes to reach agreement by March and start the plan in April.

Fujitsu is cutting monthly salaries of 500 managers who aren't board members by 3 percent from November to March. Fujitsu also pared the size of winter bonuses of 6,000 non-board managers by between 10 percent and 20 percent.