Nissan Motor has announced a major restructure – described as “recovery actions designed to enhance the company’s performance during the current global economic and financial crisis” – that will see 20,000 jobs axed in the next year and labour costs in high-cost countries reduced by 20%.
But the automaker has no plans to close any factories, chief executive Carlos Ghosn told a news conference in Japan.
Restructuring details accompanied announcement of a third fiscal quarter consolidated net loss after tax of JPY83.2bn (US$0.81bn, EUR0.55bn), compared to net income of JPY132.2bn yen ($1.28bn, EUR 0.87bn) a year ago. Operating loss was JPY99.2bn ($0.96bn, EUR0.66bn).
Nissan also revised its full year forecast including an operating loss (its first in 14 years and the first since Ghosn became chief operating officer in 1999 after Nissan formed its alliance with Renault) of JPY180bn ($1.75bn, EUR1.19bn) and net loss of JPY265bn ($2.58bn, EUR1.75bn).
“Despite actions already taken during 2008 to respond to the global crisis, worsening conditions are prompting the need for further changes to the company’s cash management strategy, business structure and investment plans,” the automaker said in a statement.
Its new plans include:
- Suspension of the 2008-2012 mid term business plan, Nissan GT 2012, though commitments to quality and zero emission vehicles remain.
- During fiscal year 2009/10, labour costs in “high-cost countries” will be reduced by 20%, from JPY875bn to JPY700bn.
- Bonus payments to the board of directors will be eliminated for this fiscal year and, from March “until the situation clearly improves”, board member and corporate officer salaries will be reduced by 10%. Salaries for managers in both Nissan Motor and affiliate companies in Japan will be cut 5%.
- A work sharing scheme for staff workers will be negotiated and announced by the end of the fiscal year.
- Global workforce will be reduced by 20,000 throughout fiscal 2009 from 235,000 to 215,000.
- Company and dealer inventory (March 2008, 630,000 units) will be reduced 20% to 480,000 by March 2009.
- Production will be “right-sized” through changes such as shift elimination, non-production days and shorter working hours to reduce global production 20% or 787,000 units from original plans by the end of this fiscal year.
- Capital expenditure reductions to achieve a 21% cash saving contribution by the end of FY2008 compared to FY2007.
- Joint manufacturing projects with alliance partner Renault in Morocco and India will be revised. In Chennai, India, the joint plant will proceed with a reduced ramp-up speed. In Morocco, Nissan will suspend its participation in the commercial vehicle assembly project near Tangiers.
- Product lines will be revised, including the cancellation of some planned models. Nissan said it would nonetheless launch an average of 10 all new vehicles per year in the 2009-2012 period, including the company’s A-platform entry level line and a dedicated all electric vehicle.
- By improving working capital, mainly accounts payable and receivable, Nissan plans to generate JPY130bn of cash in FY2009.
- An ongoing detailed review will “identify deeper synergy opportunities within the Renault-Nissan Alliance” focusing on future investments in products, technology, support functions and purchasing cost reductions. Each company will contribute to free cash flow with a minimum of JPY90bn yen (EUR750m) in “synergy benefits” during FY2009.
New organisation structure
Management changes effective from now “in order to provide an enhanced focus on both regional and functional activities” include chief operating officer Toshiyuki Shiga also taking on management of a newly created three-region structure, in addition to government affairs, manufacturing, research and development, purchasing, product planning, design, and marketing and sales. Shiga continues to report to president and CEO Carlos Ghosn.
Colin Dodge, a former managing director of Nissan Europe’s UK plant in Sunderland, has been named to the new post of chief recovery officer, reporting to Ghosn, and now heads the company’s ongoing recovery activities while taking responsibility for corporate planning and control functions. Dodge also heads the newly created region encompassing Africa, the Middle East, India and Europe.
Executive vice president Hiroto Saikawa heads a new region comprised of Japan, China and Asia-Pacific markets, remains in charge of purchasing and adds responsibility for company’s affiliates.
Executive vice president Carlos Tavares is responsible for a new region that consolidates all markets in North, Central and South America.
Andrew Palmer has been named senior vice president in charge of product planning, the Infiniti, light commercial vehicle business and newly created electric vehicle business units and will also now be a member of Nissan’s executive committee.
Nissan Motor president and CEO Ghosn said: “The additional actions we are announcing today will reinforce our ability to manage through this global crisis, but they also position Nissan for rapid, strong growth when conditions improve.
“An organisation needs to be flexible enough to meet the changing needs of the business, and I am confident we have the talent, diversity and experience to lead Nissan effectively.”
A Nissan spokeswoman was unable to provide details of changes at the European operations “at this stage”.