More Layoffs; Japan Unemployment a Record
In August, electronics industry stalwarts such as Hitachi, Toshiba, and Kenwood all announced massive cutbacks in their workforces. Slowing demand for computers, integrated circuits, and consumer electronics in general has forced the companies to make deep slashes in order to stay afloat.
Hitachi announced that it would post a loss in excess of one billion dollars for the year, and stated that it would lay off as many as 15,000 workers by next April. Approximately one-third of the job losses will be in foreign countries, with the remainder to take place in Hitachi's home country. "The US downturn is lasting much longer than we expected. We cannot hope for any positive change soon," stated Hitachi president Etsushiko Shoyama. The job cuts will reduce the company's payroll by about 4.3%. As of early August, Hitachi employed 341,000 people worldwide. Hitachi expects to report revenue of about $65 billion for the year, a decrease of about $8 billion from last year, according to the Wall Street Journal.
NEC and Toshiba have made similar announcements. Toshiba preceded Hitachi's news with its own prediction that it would cut about 18,000 workers from its payroll. Even ceramics maker Kyocera Corporation, which long ago exited the consumer electronics business, will eliminate as many as 10,000 jobs, many of them in US subsidiaries such as Kyocera Wireless Corp. and Tycom Corp. The cuts are especially drastic in view of the fact that Kyocera employs only about 51,000 people worldwide. In the 1980s, Kyocera ("Kyoto Ceramics") manufactured a line of high-quality receivers, amplifiers, tape recorders, and CD players.
Audio manufacturer Kenwood issued a statement August 30 that it would reduce its workforce by about 20% and issue approximately $59.16 million in new shares in an attempt to cope with the worsening economy. The job cuts will take place over a three-year period, with a goal of dropping as many as 2000 workers from the payroll by March 2004. At least 1200 of those job losses will happen by March 2002. Company officials tried to put a positive spin on the developments, stating that the downsizing and new financing would help it return to profitability. "We're now strengthening efforts to return to the black and achieve the aims of our mid-term business plan more quickly," said the official statement.
The widespread job cuts are desperate measures for Japan, long known for its cradle-to-grave employment policies. The nation's unemployment rate has reached an unprecedented 5%, and the Japanese government has begun building new homeless shelters to care for people who are out of work. The homeless population and the unemployment rate have been rising steadily for the past two years. "People living in makeshift tents have become a common sight in parks and under bridges around metropolitan areas," stated an Associated Press report on the problem in late August.
"Despite our earlier expectation of recovery by next spring at the latest," said Hitachi's Etushiko Shoyama, "now we are afraid that the economy won't recover for another year."