Nissan's Ugly Truth: Slashing Jobs, Shutting Factories, and Ditching Plans
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Nissan readies to cut approximately 20,000 jobs due to significant financial losses
Nissan Motor, the troubled Japanese carmaker, has announced a massive job cull of around 20,000 employees globally. That's more than double the initial 9,000 layoffs planned for late 2024, as falling demand and restructuring costs take a heavy toll.
In Japan, the company will introduce an early retirement program targeting several hundred administrative staff, marking their first attempt to shed workers through early retirement in 18 years. This is scheduled for implementation during fiscal 2025.
Nissan has also expressed intentions to close more factories worldwide, with roughly seven assembly plants in the line of fire, including potential sites in Japan. Already, the company has shuttered three plants, one in Thailand.
Production capacity is taking a hit as well, with Nissan announcing a 20% reduction in production capacity, equivalent to approximately one million vehicles. The company has also abandoned plans for a $1.1 billion factory for electric vehicle batteries on the Japanese island of Kyushu, which would have created around 500 jobs and an investment of 153.3 billion yen ($1.05 billion).
But that's not all. Nissan has entered merger talks with Honda, only to see the negotiations collapse. The company's restructuring efforts have even led to the scrapping of plans for a lithium iron phosphate battery plant, a decision that underscores its desperate attempts to cut costs.
New CEO Ivan Espinosa, who took over from Makoto Uchida last month, is championing these drastic changes as he strives to restructure the company's operations. Nissan aims to achieve positive operating profitability and free cash flow in the automotive business by fiscal year 2026 and is targeting total cost savings of 500 billion yen compared to fiscal year 2024.
Stay tuned for Nissan's outlook for the current financial year and updates on its recovery actions when it announces full-year financial results on Tuesday. It's a tough road ahead, but only time will tell if the company can bounce back from its current predicament.
[1] Nikkei Asia, Nissan to cut up to 20,000 jobs globally: source
[2] Reuters, Nissan to cut up to 20,000 jobs as part of restructuring: source
[3] Nissan Newsroom, Determining factors for the new Nissan midterm plan
- The finance industry is closely watching Nissan's restructuring efforts, as the armed Japanese carmaker plans to make a substantial investment of cutting up to 20,000 jobs globally as part of its ongoing business transformation.
- As the industry grapples with changing demand patterns and cost optimization challenges, Defi (decentralized finance) initiatives could potentially disrupt conventional investment models, offering alternative finance solutions to businesses like Nissan.
- The ongoing job cuts and plant closures at Nissan have raised questions about the future of the automotive industry, with analysts speculating that other companies may face similar predicaments as they adapt to the evolving business landscape.
