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. Last Updated: 07/27/2016

Nissan to Ax 21,000 Jobs, Slash Capacity

TOKYO -- Nissan Motor Co. pledged to swallow a bitter restructuring pill Monday, saying it will slash 21,000 jobs, or 14 percent of its work force, and cut domestic output capacity by 30 percent.

The drastic plan, announced by chief operating officer Carlos Ghosn, seconded by alliance partner Renault SA, will entail the shutdown of one of its four Japanese assembly plants and two factories belonging to affiliates by March 2001.

Ghosn said the job cuts would be made by March 2002 and come through spinoffs, natural attrition, an increase in part-time and flexible-time workers and early retirements.

Japan's second largest automaker, which formed the world's fourth biggest automaking group through an alliance with Renault in March, aims to return to profit in the year starting in April after posting losses for six of the last seven years.

"The plan is tough, perhaps even severe, but then our situation is severe," Nissan president Yoshikazu Hanawa said at a news conference announcing the plan.

Major credit rating agency Moody's Investors Service quickly responded to the sweeping restructuring pledge by upgrading the rating outlook for the automaker to positive.

Despite one restructuring effort after another in the past four years, including the closure of its Zama plant in 1995, Nissan remained heavily in debt and continued to chalk up losses when it turned to Renault early this year for help. Renault took a 37 percent stake in Nissan in return for a $5.4 billion infusion of cash.

"Nissan is in bad shape," Ghosn said, citing the company's slip in global market share since 1991 to 4.9 percent from 6.6 percent and a decline in production over that period.

The job cuts are to include 4,000 in manufacturing, 6,500 at Japanese dealers, 6,000 in sales and administrative operations, 5,000 from spinoffs and about 500 in research and development.

"In fiscal year 2002 we're looking at 127,000 in equivalent full-time jobs. That is a 21,000-job reduction, or 14 percent of total employment," Ghosn said.

Although the plan will pose a challenge, Moody's said it represents an aggressive and constructive approach toward addressing Nissan's high cost structure, its eroding market share position, and its very high debt levels.

Nissan plans to cut purchasing costs by 20 percent over the next three years, while reducing the number of the group's suppliers to 600 by 2002 from 1,145 currently.

Nissan aims for 1 trillion yen ($9.5 billion) in cost reductions on a consolidated basis in fiscal year 2002 compared with the business year ended March 31.