Nissan to promote Japan-based contract workers to full-time status

Nissan Motor Co. is moving to promote all contract workers in Japan to full-time positions as the automaker’s push to cut fixed costs gives it more room to invest in its talent pool.

About 800 contract workers will become full-time employees from April, Azusa Momose, a spokeswoman for the company said, confirming an earlier Bloomberg News report that said it would impact people at Nissan’s plants, research and development centers and head office in Yokohama. Nissan will also abolish its system of hiring contract workers.

The promotions, which will increase expenses, are a sign of Nissan’s confidence in its outlook as the carmaker makes progress in its push to cut ¥300 billion ($2.8 billion) in annual fixed costs. The cuts have afforded the company a greater ability to push to retain skilled personnel by bringing them on full-time, a person with knowledge of the matter said.

“This will help enhance workplace unity, increase operational efficiency, improve employee motivation and enable further upskilling of our workforce,” Momose said.

Nissan announced in May plans to reduce its annual fixed costs through measures such as closing production lines and slashing capacity by 20%. This came after the Japanese automaker posted a ¥671 billion net loss for the fiscal year ended March, its biggest in 20 years.

The company posted an operating loss of ¥4.8 billion for the July-September quarter, shrinking it significantly from the previous quarters’ loss of ¥154 billion.

Still, Nissan is forecasting a net loss of ¥615 billion for the current fiscal year ending March, and if the company’s performance fails to recover, the new batch of full-time employees may prove a drag. In Japan, full-time workers are legally much harder to dismiss than contract employees who can be let go after their contract periods end.