Sony to axe 8,000 jobs, close factories

The restructuring plan will hit the company's core electronics business hardest

Sony plans to cut 8,000 jobs, close factories and reduce electronics investment by nearly a third in response to the current economic conditions, it said Tuesday.

The global restructuring plan will be most felt in the company's core electronics business, which accounts for more than half of Sony's sales. As it has done in the past, Sony will downsize or withdraw from unprofitable or noncore businesses.

Five or six of Sony's 57 manufacturing plants will be closed. Only one factory, Sony Dax Technology Center in France, was named on Tuesday, but another factory outside of Japan will be axed along with several others in Japan, said Naofumi Hara, senior vice president of Sony.

The job cuts, which represent about 5% of the company's global workforce, will be worldwide and will be matched by a comparable reduction in the company's seasonal and temporary workforce. Sony didn't go into any further detail on where those cuts would be.

Sony will also delay planned expansions, such as at its Nitra LCD television factory in Slovakia, and it plans to outsource production of some parts, including CMOS (complementary metal-oxide semiconductor) image sensors for cell phones.

The company, which is one of Japan's major exporters, has been dealt a double blow: a recession gripping many of its biggest markets and a strong yen, which makes its products more expensive overseas.

For example, an electronics part that cost the company 100 yen, or $1, to make added 92 cents to the parts bill of a product three months ago. Today, that same part adds $1.08, a jump of about 15% in three months. Against the euro, the jump is higher. In the competitive electronics market, it's difficult for companies to raise prices, so Sony has been making less profit.

Looking ahead, Sony could raise prices in January in response to the yen's strength, said Hara.

Together, Sony hopes the measures will save $1 billion in its next fiscal year, which runs from April 2009 to March 2010.

Copyright © 2008 IDG Communications, Inc.

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