Nissan to cut more 11k employees as sales decline

Nissan Motor Co. plans to lay off an additional 11,000 employees, bringing its total workforce reduction to about 20,000, or 15% of its global staff. This decision follows a decline in sales and overall business performance.

In November, the company had already announced plans to cut 9,000 jobs and reduce global production capacity by 20%.

The latest layoffs are due to a sharper decline in unit sales than anticipated.

Nissan has also canceled plans for an EV battery factory in Kitakyushu City, Japan, and will close three production plants, including one in Thailand, as part of a restructuring strategy.

The company expects a net loss of up to 750 billion yen (around US$5 billion) for the fiscal year ending in March 2024.

🔗 Source: NHK World

🧠 Food for thought

1️⃣ History repeats: Nissan’s cyclical pattern of large-scale restructuring

Nissan’s announcement of 11,000 additional job cuts follows a historical pattern of major restructuring efforts during periods of financial distress.

In 1999, Carlos Ghosn implemented a radical turnaround plan that cut 21,000 jobs (14% of the workforce) and closed five manufacturing plants in Japan to rescue Nissan from $5.4 billion in debt1.

The company undertook another major restructuring in 2019, announcing plans to cut 12,500 jobs globally and reduce costs by $2.8 billion annually amid a 57% drop in operating profit2.

The current plan to eliminate approximately 20,000 positions (15% of the global workforce) mirrors these previous restructurings in both scale and approach, suggesting Nissan relies on workforce reduction as its primary cost-cutting strategy during financial challenges.

This historical context shows that while job cuts have previously helped Nissan return to profitability, they represent a reactive rather than proactive approach to market changes.

2️⃣ Dealership struggles signal deeper competitive weaknesses

Nissan’s latest job cuts reflect fundamental challenges at the retail level, where dealerships face severe profitability issues.

Nearly 40% of Nissan dealerships in the U.S. are operating at a loss, with dealer profits declining by 70% in the first half of 2024 compared to the previous year3.