Nissan has announced that it will be cutting 12,500 jobs globally as part of a massive restructuring process. This is higher than the initial estimate suggested earlier this week, when it was reported that the automaker was set to axe 10,000 jobs. The move will see the company reducing its overall global workforce of 139,000 by around 9%.
This follows on a massive drop in profits, with the company reporting that its first-quarter operating profit plunged 94.5% to 1.6 billion yen (RM60.5 million). It said that the increasing price of raw materials, currency swings and spending to meet regulatory requirements pushed up costs.
Besides the job cuts, the company is also slashing production, the culling being mostly of compact cars – and Datsun models – at underutilised plants abroad, Reuters reports. According to CEO Hiroko Saikawa, the automaker’s product line-up will be reduced by about 10%, and 14 of its facilities worldwide will be affected by the reduction plans. Production is also set to be reduced by 10% into 2023.
“We are mainly targeting sites where we made investments to produce compact cars under the Power 88 plan,” Saikawa told reporters during the company’s announcement of its first quarter 2019 results. The Power 88 plan was announced in 2011 and was intended to accelerate the company’s growth worldwide by expanding product segments and increasing brand presence in markets such as Russia and India.
No less than 51 new car models were slated to be launched under the plan, which involved broadening the global model lineup through more offerings based on its V-platform.
In May, the company had announced cuts and a scaling back in production for eight facilities, including in Spain and Indonesia, where the March hatchback and Datsun models are assembled. The automaker also produces compact car models in its plants in Mexico, Russia, France and Thailand, but there was no specific mention of locations or the scale of reduction involved.
Nissan has been losing traction in key markets, especially in the United States. The company saw its global vehicle sales fall 4.4% to 5.52 million units in fiscal 2018, the contributors to the plunge including a 9.3% decline in the US market and a 14.9% drop in Europe.
The automaker has also been struggling to repair the relationship with alliance partner Renault following the fallout from the failed merger with Fiat Chrysler Automobiles. Undercurrents continue to be present within the union, and the Carlos Ghosn affair hasn’t helped the cause either.