Isuzu Motors Ltd. announced Monday that its group of companies will cut one-quarter of its 38,000 workforce over three years to help ease its debt burden.
The move comes after Isuzu, owned 49 percent by General Motors Corp., reported earlier in the day that it incurred a consolidated net loss in fiscal 2000 of 66.79 billion yen on sales of 1.67 trillion yen, up 4.2 percent. It was its second straight year of losses.
The company said that it will cut 9,700 jobs while shutting down its main factory in Kawasaki, Kanagawa Prefecture, by the end of 2005.
It will also consider selling its head office in Tokyo and spinning off its engine assembly plant in Hokkaido.
Under the plan, Isuzu will relocate the firm’s heavy-duty truck production functions to its other main plant in Fujisawa, also in Kanagawa Prefecture.
The company’s factory utilization ratio has plunged to 50 percent due mainly to slumping truck sales that have taken a hammering from Japan’s moribund economy.
But the plan calls for bolstering the ratio to 90 percent through the closure of the Kawasaki plant and relocating production to other facilities.
Isuzu plans to cut back on auto components procurement costs by 20 percent.
Isuzu President Yoshinori Ida told a news conference that the truck maker will deepen relations with GM to develop, produce and sell sport utility vehicles overseas.
In China, Thailand and Indonesia, the two firms plan to enter into a division of labor arrangement for commercial vehicles, he said.
As for fiscal 2000 results, the company said its consolidated net loss decreased thanks to cost-cutting efforts and the promotion of joint projects with GM.
The truck and bus maker’s group net loss improved from a 104.19 billion yen loss a year earlier. It posted a pretax loss of 47.44 billion yen, down from 68.05 billion yen.
Isuzu forecast that its net profit for the year that began April 1 will come to 1 billion yen on sales of 1.61 trillion yen.
The firm said it plans to boost net profit to more than 30 billion yen by the end of fiscal 2003.
Isuzu said its overall extraordinary loss of 45.87 billion yen in fiscal 2000 was substantially smaller than the previous year’s 123.32 billion yen, though it booked special losses including a 14.74 billion yen loss for restructuring its troubled businesses.
Despite a decrease in overall automobile sales, group sales rose 4.2 percent to 1.57 trillion yen, largely due to strong demand for engine-related products, which jumped 29.4 percent over fiscal 1999.
On a parent-only basis, Isuzu posted a net loss of 57.94 billion yen compared with 103.86 billion yen in net loss a year earlier, and a pretax loss of 10.58 billion yen, down from 55.41 billion yen, on sales of 829.89 billion yen, down 0.8 percent.
Isuzu said it will skip dividend payment for fiscal 2000 as well as for the current business year, which will be the fourth consecutive year of skipped dividends.
For the current year, the company expects to register an unconsolidated pretax profit of 9 billion yen and break even in net profit on sales of 790 billion yen.
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