Sanyo cuts wages and employees in restructuring move

Sanyo Electric Co, the world's biggest maker of mobile-phone batteries, said it will cut wages by as much as a third in home-appliance manufacturing and transfer about 1,400 workers in the division to other units.

Sanyo create at least one new subsidiary for home-appliance manufacturing by March, spokesman Derek Wentz said. It will transfer about a third of the 4,900 workers to more profitable businesses such as mobile phones and digital still cameras. About 100 workers close to retirement age may choose to leave instead of transfer, he said.

Sanyo, the world's largest maker of digital cameras, has been shifting production to countries such as China to improve profitability. The company expects to lower costs by as much as Japanese Yen 10 billion (US$82 million) as a result of the restructuring measures.

"We need to reorganize to compete with Chinese and other rivals," Wentz said.

Sanyo rose as much as Japanese Yen 16, or 4.6 percent, to Japanese Yen 367 in Tokyo. The shares have fallen about 41 percent this year.

Sanyo shifted production of its small and mid-sized refrigerators to Thailand and Vietnam. The company said earlier it will start making all its home air conditioners in China by the end of March and close its plant in Ashikaga prefecture, north of Tokyo. It will continue to make larger air conditioners for industrial use in Japan.

Sanyo also shift production of ovens, massage chairs, fans and home garbage disposals to China. It will start making dishwashers in Thailand starting in January.

Sales Sanyo Electric's home appliances business accounted for 12 percent of total sales in the first half of this fiscal year.

The company's home appliance business, which expects to return to profit in the year ending March 2005, had an operating loss of Japanese Yen 830 million in the year ended March. In the six months to Sept. 30, it had a loss of Japanese Yen 5.5 billion, including restructuring costs, compared with a profit of Japanese Yen 315 million a year earlier.

Workers the home-appliance division's marketing, planning and quality control functions will remain with the parent company and the existing air conditioner section.