Japan electronics major TDK looking at first loss in seven years, will cut 8,000 jobs
08 January 2009
Japanese electronics component maker TDK Corp., the world's largest manufacturer of magnetic heads used in disk drives, said today it would cut 8,000 workers and post its biggest net loss ever this fiscal year, due to falling orders and a stronger yen. This would be TDK's first full- year loss in seven years.
The company - known to consumers for its DVDs, audio tapes and other recording media - will cut the jobs as it closes four factories outside of Japan, said spokesman Kazutoshi Kogure. He declined to comment on which factories it would close. The initials TDK come from the original Japanese name of the company: Tokyo Denki Kagaku (Tokyo Electronics and Chemicals).
The full-year operating loss, or sales minus the cost of goods sold and administrative expenses, will probably be 26 billion yen ($260 million), TDK said. That compares with a 35 billion yen profit forecast given in October and operating income of 87.2 billion yen a year earlier. It also cut its sales forecast to 673 billion ($7.32 billion) yen from 795 billion yen.
''Starting in November, demand for electronic components in all markets dropped significantly, followed by an even more precipitous fall in December,'' President Takehiro Kamigama told reporters. TDK is the latest of Japan's big-name manufacturers to cut jobs and scale back production as the global economic slump unfolds. Others, including Toyota and Sony, have also announced cuts in recent months.
Kogure said the job cuts would come mainly from regular employees, although contract workers and others in the TDK group of companies will also be included. TDK had a total of 65,500 workers as of the end September, the last time it released an official figure. He said the job cuts and factory closures would boost TDK's operating profit by 62.9 billion yen from next fiscal year, but the company could still finish in the red if business conditions don't improve.
TDK in October said it plans to reduce its 50,000-strong workforce in China by as much as 34 per cent because of rising labor costs in the country. TDK assembles all its magnetic heads for hard-disk drives in China.
The company will reduce its temporary workers in the country by 15,000 within six months to a year through voluntary retirement, natural attrition and contract expiration, CEO Hajime Sawabe said at the time. TDK will also cut as many as 2,000 administrative employees within one or two years, he said. The 8,000 job cuts are in addition to those.