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International Herald Tribune

Sanyo Electric said Tuesday that it would cut 14,000 jobs, or 15 percent of its global work force, as part of a three-year restructuring effort at the ailing Japanese company. Like many of its competitors, Sanyo has been battered by falling prices of digital cameras, DVD recorders and other consumer electronic devices. The company also suffered heavy losses from an earthquake last year that badly damaged one of its plants. Sanyo said it would trim its Japan-based work force by 8,000 as it shrinks its domestic factory capacity by one-fifth over three years. For this year alone, the company has earmarked 24 billion, or $215 million, to pay for a program to trim 3,800 jobs in Japan. Sanyo, which employs about 96,000 people, will also eliminate 6,000 jobs overseas over the same three-year period, ending in March 2008. The plan was announced by the chief executive, Tomoyo Nonaka, and Toshimasa Iue, the president, who took over last week after a management shuffle announced in April, just before the company disclosed a record loss. The cuts are part of a plan by the new management team to cut 70 billion from overall costs and halve the company's 1.2 trillion in interest-bearing debt over three years. "We have to be ready to feel some pain under this new strategy," Nonaka said. Nonaka, a former television journalist, is one of only a few women at the head of a large Japanese company. Iue is the grandson of the Sanyo founder, Toshio Iue. The company said that in a break with tradition, it would put profit before market share. "We will no longer conduct operations that don't produce profits," Iue said.

Many of the cuts are expected to come in the semiconductor unit, which has struggled since an earthquake in the northern Japanese prefecture of Niigata last October forced the company to shut its semiconductor plant there. The Osaka-based company is the world's largest maker of cellphone batteries. It also makes kitchen appliances and a wide variety of electronic parts including components for DVD and CD players, areas in which competition from growing Chinese rivals has made profit margins razor-thin.

Sanyo is also a major manufacturer of digital cameras, many of which are supplied to other electronics companies that sell them under their own brand names. Profit margins in that business have been squeezed by rapidly declining prices for cameras and other digital devices over the past year. Sanyo had a record net loss of 171.5 billion for the year that ended March 31 as weak sales of mobile phones and digital cameras compounded losses stemming from the earthquake. The company has forecast a net loss of 92 billion for the current fiscal year, which ends next March. Sanyo's plan calls for a renewed focus on its most competitive products, like batteries and solar cells. The company set a target of achieving an operating profit equal to 5 percent of revenue or more by the fiscal year ending in March 2008. Sanyo said that it expected to take a charge of 90 billion this year to pay for the first year of the revitalization plan. Company executives declined to say in which regions or divisions the job cuts would occur or which factories might be closed.