Japan's Sharp to cut worker pay in bid to balance sheet
AFPTOKYO -- Japan's Sharp Corp. on Tuesday said it would slash salaries for thousands of employees — from the factory floor to the executive boardroom — as it scrambles to repair its bleeding balance sheet.
September 12, 2012, 11:56 am TWN
The electronics giant said it was aiming to cut another 14 billion yen (US$179 million) in costs by chopping management pay by 10 percent and rank-and-file employees' salaries by 7 percent.
The cuts affecting employees in Japan would be in place until September next year, said Sharp, which earlier this year announced management and lower-level pay cuts of 5 percent and 2 percent, respectively.
Bonuses for some 27,500 employees in Japan would be halved, said the Osaka-based firm.
“Business circumstances surrounding the Sharp group are growing ever harsher, and improvement of financial strengths for recovery need to be secured,” it said in a statement.
“An additional reduction in labor costs has been decided necessary.”
Sharp also said it may issue a new sales and profit forecast for the fiscal year to March 2013 given the “still harsh business circumstances.”
The company previously said it expected a net loss of 250 billion yen for the fiscal year through March 2013, a huge increase from an earlier projection of a loss of 30 billion yen.
The deeper pay cuts underscore an increasingly dire situation for the maker of Aquos brand electronics after its share price plunged to four-decade lows last month when it reported a quarterly loss of about US$1.76 billion.
Standard & Poor's cut its credit rating on Sharp to junk status after the earnings report and sharp price drop.
The company has said it would offer nearly all of its Japanese real estate — including its Osaka headquarters — as collateral to win fresh bank loans amid doubts about a deal that would see Taiwan's Hon Hai Precision inject about US$800 million into the Japanese firm.
Local media reports have suggested Sharp was mulling how to proceed without the Hon Hai tie-up.
The deal was part of a corporate overhaul that could see Sharp cut about 15 percent of its 57,000-strong global workforce, its first layoffs since 1950.
The company, which has seen its mainstay television, liquid crystal display and solar panel products struggle, said the job reductions were part of a bid to cut annual fixed costs by 100 billion yen.
Rivals Sony and Panasonic have also been swimming in red ink as Japan's electronics giants struggle to cope with a strong yen, falling prices, heavy labor costs and fierce competition from foreign rivals.