Sharp Corp. plans to cut an additional 2,000 jobs from its workforce, bringing
the total to 10,000, as part of a package of streamlining measures, it has
The struggling electronics giant already announced a plan to cut about 8,500 jobs through voluntary leaves, mandatory retirement and the sale of TV assembly factories in Mexico and Nanjing, China. It decided to cut an additional 2,000 personnel through the sale of a plant in southern Malaysia, which was included in management improvement measures presented to the company's major creditors in preparation for a drop in revenue.
Sharp already is in negotiations to sell the plants in China and Mexico to its capital and business alliance partner, Hon Hai Precision Industry Co. of Taiwan. The Malaysian plant also is expected to be sold to the company.
As part of the improvement measures, Sharp plans to strengthen its small and midsize liquid crystal display and smartphone businesses, as well as consolidate its four household appliance, office equipment and other subsidiaries.
With these measures, the company hopes to be back in the black in fiscal 2013 with an operating profit of about 121.2 billion yen against an expected net loss of 115.2 billion yen for fiscal 2012.
The company's major creditors, Mizuho Corporate Bank and the Bank of Tokyo-Mitsubishi UFJ, basically agreed to the management improvement measures, with one senior bank official saying they "cover everything" they requested.
The banks decided last month to offer Sharp a 150 billion yen line of credit, and are expected to decide by the end of the month whether to extend 200 billion yen in additional financial assistance.
The additional loan will be discussed with Resona Bank, Nippon Life Insurance Co. and others, and is expected to give Sharp the funding it needs for the time being.
However, to complete the drastic makeover Sharp must collaborate further with Hon Hai.
The operating ratio of Sharp's LCD plant in Sakai, Osaka Prefecture, was once as low as about 30 percent. It improved to about 80 percent after it started operating in July under its business alliance with Hon Hai.
The outlets for the products expanded to include Japan-affiliated companies that have dealings with Hon Hai, which led to an improvement in the earning strength of the plant, whose performance had been a major reason for Sharp's deficit.
Negotiations between Sharp and Hon Hai over the latter's capital injection into the former, however, are protracting, as Hon Hai seeks an expanded alliance that includes Sharp offering its expertise to the firm, while Sharp and its main creditors worry about the outflow of technical strength. Sharp will need to find common ground with Hon Hai as early as possible.
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