News Room - Business/Economics

Posted on 01 Dec 2008

12 Japan automakers cut 2008 output by 1.9 mil, slash 14,000 jobs

Twelve major Japanese automakers have cut their global output for fiscal 2008 by a total of 1.9 million units from their initial plans and slashed over 14,000 factory jobs in Japan due to sluggish sales in major markets such as the United States amid the financial crisis as well as the yen’s rise, a Kyodo News tally showed Sunday.

 

The reduced output represents about 7 to 8% of the overall levels of their original plans.

 

The sweeping reduction is expected to take a drastic toll on the Japanese economy as a whole, since the auto business is the key industry in Japan and its performance directly and widely affects the future course of steel makers, parts makers, dealerships and other businesses.

 

The payroll cut has been implemented at factories across Japan, and is expected to deal a heavy blow to regional economies as well.

 

Industry leader Toyota Motor Corp has curtailed its production by a total of 953,000 units, mainly in Japan and the United States, revising its global output plan downward to some 7.92 million units, and the number of its temporary workers at domestic factories is expected to plunge to 3,000 by March next year, about one third of the roughly 9,200 workers in the January-March period this year.

 

Nissan Motor Co also plans to reduce its global production by more than 272,000 units and cut back on its temporary factory workforce to about 500 from 2,000, while Honda Motor Co decided to cut its production by 141,000 units and plans to terminate employment contracts for about 270 temporary workers at its Saitama plant at the end of December.

 

Major truck maker Isuzu Motors Ltd has scaled down its domestic production by 28,000 units and will end its contracts with a total of 1,400 temporary workers at two plants in Japan at the end of this year.

 

Isuzu Motors President Susumu Hosoi has said, ‘‘The domestic market has been bleaker than anticipated, and the recovery of the North American market cannot be expected so soon.’’

 

The automakers’ bottom lines have already been weighed on by the price upsurge in steel products, resins and other materials since earlier this year, and the global financial crisis, which deepened this fall, has further affected their performance.

 

An additional weight was financial firms’ recent move to tighten their inspections on car loans, which chilled demand in Asia, Russia and other emerging markets that had underpinned the Japanese makers’ revenues.

 

There is also concern that the recent terrorist attacks in Mumbai, India, will further push down consumption.

 

The yen’s appreciation has also hurt the Japanese makers’ global competitive edge.