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Sony Cuts Jobs To Save $1.1B In Annual Costs

12/15/2008 02:00:00 AM Eastern

Sony unveiled this month a "global profit recovery plan" it said will eliminate 16,000 regular and temporary electronics-related positions in an effort to save more than $1.1 billion in annual operating costs as the company's electronics operations continue to struggle under the weight of the global economic downturn.

In the United States, Sony said one of the first moves of the measure will be the closing of its Pittsburgh Technology Center in Westmoreland County, Pa., over the next 16 months, beginning with television manufacturing by the end of February 2009.

The action is one of the first of several plant closings Sony said will take place worldwide through March 2010 as part of the global profit recovery plan.

Other announced plant closings include a recording media facility in France. Sony announced on Dec. 9 that 10 percent of its current 57 manufacturing sites will be closed.

The Westmoreland facility first opened in 1990 for the production of rear-projection TVs. It currently has about 560 employees, who most recently have been primarily involved in the assembly of 46- and 52-inch Bravia LCD TVs, repair services and logistics. It was also used as the company's East Coast distribution center.

"The current economic climate was a key factor that led us to make the strategic business decision to streamline our manufacturing operations not only in the U.S. but worldwide," Stan Glasgow, Sony Electronics president and CEO, said in a statement.

Glasgow noted that Sony's remaining North American television manufacturing centers in Baja, Mexico, will be able to handle anticipated market demand in the region for the foreseeable future.

The company also advised local employees that repair and logistics operations at the Westmoreland facility will wind down by March 2010.

Sony executives first announced the global plan in Japan, indicating that it would cut 8,000 regular workers (about 4 percent of its global workforce) and another 8,000 temporary and contract workers around the world by March 31, 2010, the end of Sony's fiscal year. The plan will also close 10 percent of Sony's 57 production bases.

According to a company statement, the cost-reduction measures will include: "adjusting production, lowering inventory levels and reducing operational expenses. Going forward, Sony intends to adjust product pricing to mitigate the impact of the appreciation of the yen, curtail or delay part of its investment plans, and downsize or withdraw from unprofitable or non-core businesses. Furthermore, Sony plans to realign domestic and overseas manufacturing sites, reallocate its workforce and reduce head count."

The consumer electronics group also said that fiscal 2009 capital spending will be 30 percent less than outlined in its medium-term business plan.