Sony Corp. has announced a major restructuring plan. It will be cutting about 16,000 jobs worldwide — 8,000 regular jobs and another 8,000 irregular jobs — by the end of fiscal 2009 (March 31, 2010). The 8,000 regular jobs account for about 5 percent of Sony’s 160,000-strong worldwide workforce in its electronics division.
Carmakers also have started dismissing irregular employees. Sony’s move shows that the impact of the global economic slowdown triggered by the U.S. subprime mortgage crisis has spread to electronics makers as well. It could be an ominous harbinger of major companies’ firing both regular and irregular workers in large numbers.
Sony posted record net profit for the 2007 fiscal year ended last March 31. But expectations that Sony’s net profit for the current fiscal year will drop by 60 percent from the previous year to ¥150 billion has forced the firm to adopt the restructuring plan.
The yen’s sharp appreciation, coupled with the global economic slowdown, has harmed the operations of Sony’s electronics division, which achieves 80 percent of its sales overseas. Sony will not only reduce its 57 manufacturing bases worldwide by about 10 percent by the end of fiscal 2009 but also reduce capital investment for the year by 30 percent from the amount envisaged in a medium-term policy announced last June. The company hopes to save more than ¥100 billion by the end of March 2010.
Sony’s restructuring plan was announced at a time when economic indicators are becoming worse. Japan’s real gross domestic product in the July-September period contracted by an annualized 1.8 percent from the previous quarter, more than the 0.4 percent reported in November.
The government has decided on a ¥2 trillion, three-year stimulus plan to help secure 1.4 million jobs. The government and companies should do their best to prevent a vicious cycle of increased unemployment leading to less consumer spending and, eventually, contraction of the whole economy, which in turn pressures companies to dismiss more workers.
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