More Bad News at Nissan
Call it anything other than mass layoffs.
Nissan is shrinking again. Not in the sense that it plans to build smaller cars, but that the Japanese automaker is downsizing its workforce in an attempt to stabilize a company at risk of circling the metaphorical drain.
On Tuesday, Nissan announced that it will reduce its U.S. workforce of 20,000 employees by offering buyouts to workers across its core and luxury brands. The automaker says that the buyout offer will be voluntary, available to both hourly and salaried workers aged 52 years and older. Nissan doesn't specify the number of employees that it plans to target, nor if there will be mandatory layoffs should that number remain unmet.
This news comes just months after the automaker announced a nine-percent cut to its global workforce, placing 12,500 total jobs on the chopping block worldwide. It's unclear if this round of buyouts is related to that decision. In summer 2018, Nissan reduced its North American production capacity by 20 percent due to declining sales.
"Like many other automotive companies, Nissan North America is taking proactive steps to assess our structure, workflow, and operational efficiencies amid a challenging industry environment," wrote Nissan's head of sales and senior VP, Airton Cousseau, in a letter sent to dealers obtained by Automotive News.
"This reorganization will create office synergies that will enable a leaner organization while still focusing on dealer profitability and your ability to continue providing a quality customer experience. You will continue to receive all the support you need."
Buzzwords aside, this move is Nissan's response to not only its own slumping sales figures but also an industry-wide downturn after a momentous decade of growth and positive cash flow.
The auto industry as a whole is beginning to watch as consumers realize that they've had their fill—especially with new car sales not doing so hot right now. According to CNBC, this downward trend means that manufacturers exited 2019 with one of the worst sales years since the 2008 recession. Restructuring is a sign that Nissan is looking to resize its company to a more appropriate proportion aligned with its current sales figures, a number which drooped nearly 10 percent last year.
Forward-looking projections don't look so great either. Nissan has also announced that it plans to switch its financial and sales reporting from monthly to quarterly. The automaker says that this move is to "provide a clearer picture of sales performance over a longer period of time," permitting it to smooth out its sales over a three month period rather than report up-and-down trends, effectively removing the sting of poor numbers month-over-month. This is a method that has been adopted by other industry players (including Fiat-Chrysler, Ford, GM, BMW, and Porsche) over the past year to help investors look past declining month-to-month sales.
Will smoother financial reporting and reduced costs be enough to save the automaker from itself and the market? Carlos Ghosn, the brand's former CEO-turned-fugitive, has reportedly claimed that the writing has been on the wall for years, foreshadowing a company-wide bankruptcy by 2022. Meanwhile, dealers are begging Nissan for increased support and a better brand image before it all boils over.
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