Nissan to Slash Payroll, Pare Japanese Output

By JOHN MURPHY

TOKYO -- Nissan Motor Co. was expected Monday to announce plans to slash more than 20,000 jobs world-wide, shift production out of Japan and seek government assistance from Japan, the U.S. and elsewhere, a person familiar with the situation said.

Japan's third-largest car maker by sales also is suspending its goal of 5% annual revenue growth until 2012, which had been a key commitment of its current management plan, the person said.

Nissan's broad, new recovery program comes as the car maker -- reeling from falling demand world-wide, a global credit crunch and a soaring yen -- is expected to announce dismal earnings for the quarter ended in December.

The deep job cuts mark a serious setback for Chief Executive Carlos Ghosn, who had been celebrated in Japan for saving Nissan from the brink of collapse. In the last few years he has been considered the industry's top manager, credited with forging a complex alliance between Nissan and Renault SA.

Moving production from Japan signals new trouble for a country that has profited by exporting autos to the U.S. while Detroit's Big Three have struggled to reverse their long slide.

Nissan's move caps a string of grim forecasts by Japan's auto makers, which are cutting jobs, slashing production and taking other measures to stem growing losses as the sales downturn deepens.

Like its Japanese rivals, Nissan has been battered by the gathering strength of the yen, which diminishes the value of overseas earnings and drives up the cost of vehicles produced in Japan for consumers abroad.

But Nissan is the first Japanese auto maker to announce major plans to move production -- and jobs -- from Japan to lower-cost markets in order to escape the impact of the strong yen.

The auto maker announced last month that it would move production of the Nissan March, its top-selling compact car, to Thailand from Japan. Nissan expects this is just the beginning of a substantial exodus of parts and vehicle production out of Japan to lower-cost markets.

Nissan has no plans to close plants as a result of the changes. But it expects that more than half of the more than 20,000 job cuts, which are expected by March 2010, will be in Japan. The remaining job cuts will be mainly in North America and Europe, the person said.

Nissan had 240,000 employees in March 2008. It has already eliminated about 2,000 temporary jobs in Japan and has announced plans for about 4,000 more job cuts at factories in Spain and the U.S. It has scaled back global production and slowed assembly lines to shrink its inventory as car sales in the U.S. and in other parts of the world have plummeted.

The company also will trim model introductions over the next four years, releasing an average of 10 new vehicles a year instead of its original goal of 12 a year, the person said.

But Nissan isn't making cuts to its program aimed at producing an electric vehicle by next year. The auto maker plans to tap a U.S. Department of Energy $25 billion loan program aimed at helping the industry develop more fuel-efficient vehicles, making Nissan the first Japanese auto maker to seek the funds. Nissan also is considering applying for low-interest loans from the Japanese government as part of an effort by the Development Bank of Japan to assist businesses hurt by the global crisis.

To oversee its cost-saving efforts, Nissan is appointing Colin Dodge, a member of its executive committee, to the new position of chief recovery officer.

Nissan also is streamlining its management structure, slimming its four regional divisions -- Japan, Europe, North America and general overseas markets -- into three regions: Asia; the Americas; and Europe, the Middle East and Africa.

Write to John Murphy at john.murphy@wsj.com