The severity of Mazda’s financial troubles became more apparent late last week after it was discovered that the automaker has plans to reduce its American workforce in the near future.
Automotive News recently obtained a company memo detailing Mazda’s plan to reduce its staff of 701 U.S. employees. The process will start as early as next week and will be carried out in three stages. Automotive News provided the following summary:
• A “voluntary” package that will include separation pay, a lump-sum payment based on years of service and help in finding a new job. Employees must apply by April 16. Mazda will decide by April 27 whether employees who apply are eligible to receive the package.
• A “redeployment process” that will restructure the organization to reflect a smaller work force. Employees will be put into the new structure starting May 16.
• ”Involuntary” separations. If Mazda doesn’t get enough volunteers to reach its cost-cutting goals, some workers will be dismissed. Those employees won’t be given the “enhanced benefits” that the volunteers will receive. Mazda will begin notifying workers who are losing their jobs on May 29.
It’s unclear how many employees Mazda is looking to cut. Mazda CEO of North American Operations Jim O’Sullivan wrote in the memo that the company is “in the midst of an extremely challenging business environment. It has become necessary for us to reexamine our business to accelerate further cost improvements.”
Mazda predicts it will lose a total of 100 billion yen ($1.29 billion) this fiscal year, which ends March 31. It will be the fourth straight year of losses. A few weeks ago, Mazda CEO Takashi Yamanouchi said the company was actively seeking partners, though Ford’s 3.5-percent stake in the company will be a hurdle for a financial partnership. Instead, it will likely share its new Skyactiv technologies, which includes efficient engines and lightweight vehicle construction.
The automaker also has plans for a public stock offering of at least 1.1 billion shares. Ideally, the offering will net 162.8 billion yen ($2 billion) and would provide capital for operations and future plans including a new factory in Mexico, expected to manufacture cars for the North American market. Mazda currently exports most of its cars from Japan and suffers from the fluctuating value of the Japanese yen.
The U.S. remains a relatively bright spot for Mazda in terms of vehicle sales, as total volume in 2011 reached 250,426 units, up 9.1 percent from 2010. Mazda hopes to maintain the momentum by increasing its marketing efforts, especially for the new 2013 Mazda CX-5 crossover. The automaker hopes to sell at least 50,000 CX-5s by the end of 2012.
Source: Automotive News (subscription required)