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Japan's fourth largest automaker may seek bailout funds
With the original forecast being a $1.76 billion profit, Nissan CEO Carlos Ghosn has just announced that the company will actually see a loss for the past fiscal year – to the tune of $2.91 billion.
Ghosn cited Nissan’s problems as being three-fold: the current credit crisis, the worldwide recession and the strengthening yen.
To help turn Japan’s fourth largest automaker around Ghosn has a solid plan of action, which includes the reduction of worldwide Nissan staff from 235,000 employees to 215,000 staff – meaning that throughout the next fiscal year the company will layoff 20,000 workers, or 8.5 percent of its staff.
Of that number, 2,000 temporary jobs in Japan will be eliminated, as will 1,680 jobs in Spain. In the U.S. 1,200 retirement packages will be offered. It is not known where the remainder of cuts will occur.
Other key initiatives include cutting labor costs by 20 percent to $7.69 billion; reducing new products over the next five years from 48 to 60; slowing the development of Nissan’s Chennai, India factory; ceasing involvement in Renault’s Tangiers, Morocco factory; reducing board member pay by 10 percent and manager pay by five percent.
Nissan expects that 2009 will continue to be troublesome with total production seeing a reduction from 62 million units to 50 million. To meet this lower demand Nissan will scale-back production by 20 percent.
Ghosn also announced that the company may seek bailout funds from governments around the world. According to Japan’s Nikkei newspaper, Nissan may seek up to $549.5 million dollars in loans in Japan.
Despite all the bad news, Nissan has it better than most, posting a modest 10.9 percent sales decline in 2008.