Nissan to cut 12,500 jobs as Crisis Deepens after Profit Wipe Out

Nissan Motor Cooperation unveiled its biggest restructuring plan in a decade, axing nearly a tenth of its workforce and flagging possible plant closures to rein in costs that ballooned when Carlos Ghosn was CEO.

The cuts announced on Thursday followed a decimation of Nissan’s quarterly profit, highlighting how a crisis -

brought about by sluggish sales and rising costs - is deepening at Japan’s No. 2 automaker in the wake of a financial misconduct scandal over Ghosn. Ghosn has denied the charges.

Nissan will reduce at least 12,500 positions globally by March 2023 - its deepest job cuts since 2009 - and slash production capacity, mainly of compact cars at underutilized plants abroad. The move will shrink its product line-up by about 10%, Chief Executive Hiroto Saikawa said,

The maker of the Rogue SUV crossover and the tiny, low-cost Datsun Redi-Go, had 138,000 employees as of March 2018.

“We are mainly targeting sites where we made investments to produce compact cars under the Power 88 plan,” Saikawa told reporters at a briefing at Nissan headquarters, referring to an aggressive growth strategy spearheaded by Ghosn in 2011 to grab 8% global market share and an 8% operating margin.

Saikawa said a total of 14 facilities would be affected.

Years of heavy discounting and fleet sales, particularly in the United States, has left Nissan with a cheapened brand image and low vehicle resale values, and also hit profits.

Nissan’s first-quarter operating profit plunged 98.5% to 1.6 billion yen ($14.80 million), its worst performance since a loss in the March 2008 quarter.

(For a graphic on 'Nissan operating profit, margin' click tmsnrt.rs/2MeM0C8)

“Profitability is very poor at the moment,” Saikawa said, but added that the company was pushing to achieve its revenue target of 14.5 trillion yen and operating margin of 6% through the end of fiscal 2022.

The automaker said global vehicle production will fall 10% through the year to March 2023 while global sales till then will increase modestly to 6.0 million units annually from the current 5.5 million.

• Reuters