Tokyo - Toshiba announced today it will lay off more than 18,000 workers by 2004 and during this period the CE and computer giant will undergo a massive overhaul of its business operations.
Today's news followed Toshiba's financial report that it expects to post a loss for the year that approaches $1 billion.
Under the plan Toshiba will eliminate 10 percent of its worldwide workforce of 188,000 by the end of its fiscal year ending in March 2004. Toshiba's Japan-based staff will absorb most of the cut as it is reduced by 12 percent to 127,000 from 144,000, the company said in a written release. Toshiba will also look to assist people who wish to retire early and have 10,000 other employees shift jobs within the company.
Toshiba will reorganize its manufacturing base in light of Japanese domestic demand, close or consolidate 21 domestic manufacturing facilities, reduce 98 domestic manufacturing and engineering companies by 25 percent, expand outsourcing and concentrate research and development efforts at its Ome operations facility. These moves will take place by the end of fiscal 2003.
Other cost saving initiatives include, reducing the company's headquarter staff by 10 percent starting in October, and the creation of the procurement and Internet-ready divisions. The company aims for procurement costs to be slashed by 20 percent during fiscal 2001 and 2002. This will be accomplished by halving the number of suppliers Toshiba uses to about 3,400, establishing corporate wide procurement practices and expanding electronic purchases.
The Internet-ready division is expected to be up and running by the end of September and will handle all IT systems.
Toshiba's maneuvers are part of a new strategy dubbed the 01 Action Plan. It focuses on making improvements in three primary areas: intensifying competitiveness, streamlining management and corporate initiative.
Toshiba's renewed emphasis on competitiveness has the company redefining itself as a 'complex' organization with interests in three domains: industry and society, the individual and components. In addition the company's individual businesses will be reorganized around three newly developed business models. Those working under the innovator model will take the initiative in developing and promoting new businesses and products. Others using the integrator model will bring Toshiba's core strengths to alliances with third parties and the platform model will enhance specific capabilities and secure competitiveness.
The company has also developed a yardstick to measure the success of its various ventures. Using several undisclosed standards, Toshiba will evaluate a business's success, which in turn will determine the level of resources it receives. Businesses shown to be doing poorly for two consecutive fiscal half-year periods will be given extra attention. Those that fail to perform for two fiscal years will become candidates for termination.