Sony to Trim 8,000 Jobs and Reduce Investment

The Japanese consumer electronics giant, the Sony Corporation, said Tuesday that it would eliminate 8,000 jobs and rein in planned investment as it reacts to the global economic slowdown.

Sony, which had already announced scattered cost-savings measures, blamed the rapid deterioration in the global economic outlook and the strength of the Japanese currency for the cuts.

“These initiatives are in response to the sudden and rapid changes in the global economic environment,” Sony, which has 160,000 employees, said in a statement. Sony aims save more than 100 billion yen, or $1.1 billion, a year through the measures, which also include shutting several plants.

About 10 percent of the company’s 57 plants will be shut, including 2 overseas sites, and plans to expand a site in Slovakia where LCD televisions for the European market are assembled have been delayed. The statement did specify which plants will be closed.

Sony will also trim spending in semiconductors and will outsource a part of the production it had planned for image sensors for cellphones.

“Based on such measures, Sony is planning to reduce investment in the electronics business by approximately 30 percent” in the fiscal year ending March 2010, the company said.

The announcements highlight the extent of the pain many Asian exporters — especially in Japan — are facing as the global financial crisis deepens. Like other Japanese manufacturers, Sony has suffered from slowing consumer demand, aggravated by the yen’s rally against the dollar and the euro in recent months, which makes Japanese goods more expensive for consumers in the United States and Europe.

The Japanese domestic market also is faring badly, with Japan last quarter slipping into recession, and no sign of an upturn before the second half of next year at the earliest. Reports released on Tuesday indicated that Japan’s economy sank deeper into recession in the third quarter than initially estimated.

Japan’s export-driven economy contracted 0.5 percent in July-September, far more than the preliminary figure of a 0.1 percent decrease, revised gross domestic product figures indicated.

Sony’s earnings — like those of many of the region’s export giants like Canon, Samsung and Honda — have plummeted as a result of the slowing export and forced the company to cut its annual profit forecast for the fiscal year through March 2009 by 58 percent in October.

The announcement was made after the Tokyo market closed and Sony shares closed up 3.9 percent.

Tags: Sony, Technology