Sony to slash investment, shut plants, cut 8,000 jobs

December 10, 2008|By New York Times News Service

The Sony Corp., the Japanese consumer electronics giant, said yesterday that it would eliminate 8,000 jobs and rein in planned investment in reaction to the global economic slowdown.

Sony, which had already announced scattered cost-saving measures, blamed rapid deterioration in the global economic outlook and the strength of the Japanese currency for the cuts.

The measures, combined with a bleak outlook from a Sony rival, Samsung, and news that Japan's economy had contracted more than initially thought during the third quarter, highlighted how much Asian economies are suffering because of the financial crisis - now increasingly also an economic crisis - that began in the United States last year.

"The number of job cuts in Japan will increase day by day," said Tomoko Fujii, head of economics and strategy in Tokyo with Bank of America.

"These initiatives are in response to the sudden and rapid changes in the global economic environment," said Sony, which has 160,000 employees. Sony intends to save more than 100 billion yen, or $1.1 billion, a year through the measures, which include closing several unspecified plants.

About 10 percent of the company's 57 plants, including two overseas sites, will be shut, and expansion of a site in Slovakia where LCD televisions for the European market are assembled has been delayed.

Sony will also trim spending in semiconductors and will outsource a part of the production it had planned for image sensors for cell phones.

"Based on such measures, Sony is planning to reduce investment in the electronics business by approximately 30 percent" in the fiscal year ending March 2010, the company said.

Still, many analysts were unconvinced that the cost-cutting would be enough to shield Sony from the effects of the global slowdown.

Kazuharu Miura, an analyst who covers the electronics industry at Daiwa Institute of Research, said, "Considering the slowdown of consumption in 2009, I doubt if this measure can offset the downturn of the sales. The company's operating profit will decline."

The Japanese domestic market also is faring badly, with Japan last quarter slipping into recession. Its export-driven economy contracted 0.5 percent in July-September, far more than the preliminary figure of a 0.1 percent decrease.

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