The OEM is considering cutting around 5,000 jobs worldwide to “slash fixed costs”.
Japan Times reported on rumours from “informed sources” that Sharp may cut around 10 percent of its global workforce, or 5,000 jobs. In turn, the OEM is said to be considering “reducing salaries in Japan” in an effort to “slash fixed costs”.
These latest developments follow years of financial struggles for Sharp, with employee wages reduced by 10 percent in September 2012 and 11,000 jobs cut in October 2012. Japan Times noted that these latest plans to downsize “will likely subject Sharp’s management to criticism” for failing to meet the job cut objectives from 2012. The OEM cited “delays in divesting overseas operations” as its excuse for missing the goal of cutting down on spending.
The cuts also come after the OEM reported in January 2014 that its turnaround was “about 90 percent done”, and it is set to receive ¥200 billion ($1.67 billion/€1.52 billion) in “financial assistance” from debt-equity swap arrangements with Bank of Tokyo-Mitsubishi UFJ and Mizuho Banks, its main creditors. In March 2013, it registered a consolidated net loss of ¥545.3 billion ($4.5 billion/€4.1 billion) attributed to “massive losses on investments” in its LCD business.
The job cuts planned will see 3,000 of 24,000 employees lose their jobs in Japan under voluntary early retirement programmes, while the 2,000 other jobs will be removed “mainly via restructuring”. Sharp plans to close its television manufacturing plant in Mexico as well, and these latest cuts are predicted to cost the OEM ¥30 billion ($250 million/€228 million) in “additional restructuring charges”.
Japan Times also stated that the cuts will “be included in a business rehabilitation plan” set to be released after talks with creditors. Company President Kozo Takahashi met with creditor executives in early March to “seek support” for the plans, with the creditors “demanding more aggressive turnaround steps”. The 2012 cuts saw 2,900 employees lose their jobs, and cost Sharp ¥25 billion ($208 million/€190 million) in “retirement-related expenses”, and the OEM is set to report a group net loss of around ¥200 billion ($1.67 billion/€1.52 billion) for the last financial year.