Nissan Deals 6,400 Layoffs With More Coming as Profits Plummet Nearly 99 Percent
Nissan expected ugly first-quarter 2019 results, but nothing quite this bad.
Nissan announced Thursday that its first-quarter financial results are worse than anticipated, and that it will lay off around 12,500 employees worldwide within the next four years.
According to its financial year 2019 first-quarter report, operating profit this past quarter totaled ¥1.6 billion ($14.7 million) on a net revenue of ¥2.37 trillion ($21.8 billion). For context, Nissan's operating profit was ¥109.1 billion ($1 billion) on a net ¥2.72 trillion ($25 billion) revenue over the same period in 2018, meaning Nissan's quarterly operating profit has tanked by nearly 99 percent.
"The results were really more negative than we expected," explained Nissan CEO Hiroto Saikawa at a press conference, reports Automotive News. "We thought the situation would be challenging. But the actual retail performance was slightly under what we expected. We have to admit that."
Nissan attributed its worse-than-anticipated quarter to a shrinking global vehicle market, investments to future-proof its products, rising raw material costs, and tumultuous exchange rates. Saikawa has previously outlined a goal to inflate Nissan's operating profit margin to six percent, or more than double the 2.7 percent Nissan achieved across fiscal year 2018, which ended in March this year. To do so, Saikawa intends to boost annual U.S. market sales to 1.4 million vehicles, but also reduce costs the same way General Motors is: layoffs.
Unlike GM, which primarily eliminated white-collar jobs, Nissan plans for most of the 12,500 layoffs planned by the end of March 2023 to affect its manufacturing workforce. Nissan's reportedly under-utilized, 7.2-million-vehicle annual production capacity is expected to shrink to 6.6 million vehicles as a result.
Around 6,400 layoffs will reportedly occur by the end of the current fiscal year, which concludes at the end of March 2020. Nissan North America will terminate 1,420 employees during wave one of layoffs, though it says it has no plans to eliminate further positions as part of future layoffs.
"Nissan has already taken steps to rightsize its North America region," a company spokesperson told The Drive. "We will continue to monitor and react to market demand, but have no plans for further workforce reductions at this time."