Wednesday, December 10, 2008

TOKYO | Sony Corp. is slashing 4 percent of its worldwide work force, reining in spending and shutting plants as it tries to ride out a looming worldwide recession that is battering Japan’s export-reliant manufacturers.

Tokyo-based Sony, which is cutting 8,000 of its 185,000 jobs, said Tuesday it will shut five or six plants - about 10 percent of its 57 factories. Sony also plans to reduce its electronics investments by about one-third by the end of March 2010, although it did not give specific numbers.

The job cuts are the most drastic here since the U.S. credit crunch hit over the summer. They are a bad twist for Sony, which has been recovering from internal problems in recent years under cost-cutting reforms of Chief Executive Officer Howard Stringer.

“This may mean that Sony is now back at square one,” said Kazuharu Miura, electronics analyst at Daiwa Institute of Research in Tokyo. “Japanese companies are all in trouble because of this unexpected worldwide slowdown.”

Mr. Miura also warned that Sony’s measures might not be enough to offset its sliding profits.

Sony said a plant in Dax, France, which makes tapes and other recording media will be among the plants to close, but it declined to list the others. The moves will produce more than $1.1 billion in savings a year by March 2010, the company said.

“Now we are all facing a recession together,” said Senior Vice President Naofumi Hara. “It is impossible to predict how much longer the situation will last.”

Sony’s announcement comes amid similar news from other Japanese manufacturers, which face plunging demand at home and abroad, as well as falling gadget prices and unfavorable currency fluctuations.

Sony is particularly vulnerable to the strong yen because about 80 percent of its sales come from overseas. The dollar has dropped to about 93 yen from 117 yen last year, eroding with it Sony’s foreign income.

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