Nissan to Cut 12,500 Jobs After Profit Plunge

The automaker is cutting 9% of its global workforce after reporting a 99% plummet in operating profit.
Nissan to Cut 12,500 Jobs After Profit Plunge

Japan’s second-biggest automaker is cutting 12,500 jobs — about 9% of its workforce — in a turnaround effort after reporting a 99% plunge in operating earnings. The car maker also plans to cut global production and model lineups by 10% by the end of fiscal 2022.

The job cuts, the company’s most since 2009, and will reduce the production of compact cars at underutilized plants abroad, a total of 14 facilities.

The workforce reduction comes at a time when the auto industry around the globe is facing tremendous pressure to prepare itself for the future, cutting jobs, and focusing more on electric and self-driving technology.

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“Profitability is very poor at the moment,” said Hiroto Saikawa, Nissan’s chief executive, during a briefing at Nissan headquarters.

The company posted a 99% plunge in first-quarter operating profit to $14.80 million after it suffered falling sales in every major market except China. Revenue dropped almost 13% compared to the same quarter a year ago.

The company attributed its big profit loss partly to former CEO Carlos Ghosn, who was fired amid charges of suspect expenses. Ghosn, currently under house arrest in Tokyo, has accused Nissan and Mitsubishi of breaching his contract as an employee and is seeking $16.8 million in damages.

The global auto business is dealing with an abundance of stressful issues, including China’s distress over the trade war with the United States, which has reduced demand, and tougher emissions regulations affecting diesel car sales in Europe.

Other automakers are slashing jobs as well. In May, Ford cut 7,000 white-collar jobs, or about 10% of its salaried staff worldwide, and closed plants to save the company about $600 million a year. In June, the automaker cut 12,000 more jobs in Europe.

General Motors in November 2018 eliminated about 8,000 non-union jobs, or 15% of its salaried and contract workers. GM also closed five North American factories.

On Thursday afternoon, Nissan was trading at $13.95, up 0.035 cents, or 0.25 %. The stock opened at $13.93, with a high of $14.07 and a low of $13.92.