Nissan has announced that it will be cutting 12,500 jobs across the globe by 2022, after revealing that the company’s quarterly operating profit crashed by 98.5%.
“Falling sales and rising costs” saw the Japanese carmaker’s operating profits in the three months to the end of June drop to 1.6bn yen (£11.9m), as revenue slumped by 12.7% to 2.37bn (£17.6m) yen, The Guardian reports.
Sales in Europe slumped by 17.8% to 536,000 during the first quarter, while US sales dropped by 9.8% to 1.4 million, adds The Independent.
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In a bid to turn around Nissan’s ailing fortunes, the firm is also to reduce its global production capacity by 10% by the end of 2022, and to cut the number of products by 10%.
The ongoing “period of turbulence” follows the ousting of Nissan chair Carlos Ghosn last year, says the news site. He has been charged with several counts of financial misconduct, which he denies.
Ghosn was a driving force behind the company’s global expansion, particularly in North America. But with profits now in free fall, Nissan employees across the globe are facing an uncertain future.
Are workers in the UK affected?
Nissan has yet to announce where the job cuts will fall, leaving some 7,000 workers at the company’s Sunderland facility on tenterhooks.
Given that the 12,500 jobs set for the chopping block equate to less than 10% of the company’s global workforce of 139,000 staff, it’s unlikely that the British factory will be the focus of the carmaker’s cull.
However, Nissan says the majority of job losses will take place outside of Japan.
The Financial Times claims that the Sunderland plant was already “under scrutiny”, after Nissan announced earlier this year that it would be axing two models built at the factory following “disappointing European sales”.
Industry experts estimate that “hundreds” of new positions were lost as a result of those cuts, notes Autocar.
And the reaction?
Julie Palmer, regional manager at British insolvency specialists Begbies Traynor, told The Independent that Nissan is “clearly in distress”, with the “accusations of financial crimes against its former chairman still lingering”.
“For workers in the UK, there is a concern that they are in danger due to the deal that Japan had recently struck with the EU on trade, which means that tariffs on Japanese car exports to the EU will begin to taper towards zero over the next ten years,” she said.
“But the Sunderland plant is strong and its production line has proven to deliver time and time again in recent years.”
Motoo Nagai, a member of the Nissan board, said earlier this week that job cuts were vital if the company was to bounce back, The Guardian reports.
“It's not a simple restructuring, it’s about revitalisation to make Nissan grow again,” he said.
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