15 major manufacturers to slash capital spending 24%

Fifteen major manufacturers plan to cut capital investment in fiscal 2009 by 24.4 percent from the previous year to ¥3.61 trillion, indicating they are prioritizing production cuts while the timing of the recession’s bottoming out remains uncertain.

The companies’ total earnings for the year ending next March represent a decline of ¥1.17 trillion from fiscal 2008 and a fall of nearly ¥2 trillion from fiscal 2007, according to their latest earnings reports.

Automakers have restricted capital investment for fiscal 2009 following a deterioration in earnings due to a global auto sales slump since the second half of fiscal 2008.

Toyota Motor Corp., in a move away from the capital investment expansion it promoted particularly outside Japan, said it plans to reduce fiscal 2009 investment to ¥830 billion, the first time in six years it will fall below ¥1 trillion.

“Annual capital investment may remain below ¥1 trillion for the coming years,” company Executive Vice President Mitsuo Kinoshita has said.

Honda Motor Co. said it intends to lower fiscal 2009 investment by more than ¥200 billion, while Mazda Motor Corp.’s investment plan calls for a 63 percent cut to ¥30 billion.

Electrical machinery makers are also cutting back on capital investment after logging losses in fiscal 2008.

Toshiba Corp. will cut investment, primarily in the slumping semiconductor division, a senior company official said.

Toshiba plans to limit its fiscal 2009 investment to ¥250 billion, or 60 percent of the fiscal 2008 level. Hitachi has projected investment at ¥290 billion, or two-thirds the level of the previous year.

Chemical manufacturers and steelmakers are planning to limit capital investment to secure in-house reserves.