Nissan bosses announce $7 billion loss and 20,000 job cuts
Nissan’s future is on the line after the announcement of profit losses, job cuts and factory closures signal an oncoming bloodbath.
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It hasn’t been a smooth ride at Nissan for Ivan Espinosa.
Just over a month into the job, the new chief executive officer has announced another 11,000 job cuts and plans to shut seven factories globally.
The cuts will bring the total headcount loss to about 20,000 as the battered Japanese carmaker fights to keep afloat.
The cuts come on the heels of a catastrophic year for the automaker, with its annual operating profit plunging 88 per cent to just $682 million.
A net loss of 671bn yen (AUD $7.033bn) in the 12 months to March paints a bleak picture for a company that industry insiders predicted in December would have just 12 months to survive.
MORE:Honda’s wild Nissan ultimatum
Nissan also failed to issue its forecast for the year ahead, a telling sign of trouble.
Espinosa, formerly Nissan’s product strategy chief said the company would slash costs by $4.8 billion through a combination of plant closures, workforce reductions and supply chain simplifications.
The company plans to shrink its manufacturing footprint from 17 plants to just 10 and reduce parts complexity by 70 per cent.
Espinosa laid the situation bare during a press conference in Tokyo.
“Our full-year financial results are a wake up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support,” he said.
Nissan chief financial officer Jeremie Papin, speaking alongside Espinosa, warned the pain was far from over.
Nissan is expecting an operating loss of $2.1 billion in the first quarter alone.
MORE:Nissan claims it is ‘here to stay’
The automaker has lost ground in US and Chinese markets and, like rivals, is being hammered by new American tariffs and tough competition from Chinese EV makers.
Adding to the damage is the failed merger talks with Honda which resulted in Espinosa’s appointment as CEO.
Former Nissan boss Makoto Uchida was sacked in March after talks with Honda collapsed.
The company announced Uchida’s exit at the same time the Japanese automaker revealed Espinosa would take his place as part of sweeping cuts across its boardroom.
Espinosa is the fourth executive to lead the company in six years following the sensational arrest – and escape – of enigmatic chief executive Carlos Ghosn in 2018.
The troubled company made global headlines in November when whistleblowers revealed that the company might not survive another 12 months.
MORE: Nissan, Honda end merger talks
Nissan announced plans to merge with Honda in December, but the Japanese giants stepped away from the negotiating table in February when they could not reach a compromise.
Leaks to business publications suggested Nissan’s Uchida could not stomach his brand being the junior partner in any joint venture, and that Honda did not want to deal with him any longer.
Espinosa has close ties to Australia following a role leading the company in South East Asia, where the Nissan Navara ute is a key model.
The brand is preparing to launch important new models in Australia including a successor to the Nissan Patrol four-wheel-drive, and a rival to Tesla’s Model Y SUV in the Nissan Ariya. Nissan is also chipping away at a successor to the GT-R supercar which recently ceased production.
Originally published as Nissan bosses announce $7 billion loss and 20,000 job cuts
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