Mazda offers U.S. buyouts, may dismiss workers as losses mount
O'Sullivan: "Extremely challenging"
LOS ANGELES -- Mazda Motor Corp., battling four years of losses, is offering voluntary buyout packages to U.S. workers and raising the specter of dismissals in an effort to cut costs.
Mazda is "in the midst of an extremely challenging business environment," said Jim O'Sullivan, CEO of Mazda North American Operations, in a March 7 memo to employees obtained by Automotive News. "It has become necessary for us to reexamine our business to accelerate further cost improvements."
Mazda spokesman Jeremy Barnes confirmed the plan today. Mazda has 701 U.S. employees, he said.
The announcement follows last month's disclosure that the Japanese parent expects to post a net loss of 100 billion yen, or $1.2 billion, for the fiscal year that ends March 31. It will be Mazda's biggest lost in 11 years, reflecting the export-dependent automaker's exposure to the strong yen.
Among Mazda's five regions, only North America has posted a vehicle sales increase in the first three quarters of the fiscal year. U.S. sales are up 48 percent this calendar year through February.
According to the memo, the effort will be carried out in three stages:
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 get the "enhanced benefits" that the volunteers will get. Mazda will begin notifying workers who are losing their jobs on May 29.
On March 5, Mazda said it will raise about $1.9 billion by selling new stock.
Proceeds will help fund construction of overseas assembly plants, including a factory in Mexico scheduled to open next year. Mazda wants to build half of its vehicles outside of Japan by the fiscal year ending March 31, 2016, to reduce its exposure to currency fluctuations. That compares with 30 percent today.
Mazda is also actively seeking partners. This week, Chrysler-Fiat CEO Sergio Marchionne said Mazda or Suzuki would be good fits.
"Those two companies would be complementary to Fiat's activities," Marchionne said at the Geneva auto show. "We talk continuously with Suzuki; we talk with Mazda; we talk with everyone."
Though Mazda CEO Takashi Yamanouchi has said the company is "aggressively" pursuing a partnership, a capital alliance is unlikely. Ford Motor Co., which once held a controlling stake in Mazda, still owns about 3 percent.
Any potential tie-up would likely involve Mazda sharing at least some of its new Skyactiv vehicle technology portfolio with another automaker. Skyactiv is the umbrella term for Mazda's suite of new, lightweight vehicle bodies and chassis systems, and high-efficiency powertrains, including gasoline and diesel engines.
Mazda has billed the technology as a "game changer" that will enable it to cut vehicle development and production costs while boosting fuel efficiency and reducing emissions.
The Mazda CX-5 compact crossover, which went on sale last month in the United States, is the first Mazda vehicle to use all of the Skyactiv technologies.
The CX-5 is the centerpiece of Mazda's push to boost U.S. sales by 22 percent this year to more than 300,000 vehicles, a level the automaker hasn't seen since 1994.
Mazda hopes to sell 50,000 CX-5s in 2012 and continue the momentum of Mazda3 sales, which were up by 56 percent through February.
jThe Mazda3 received an optional, 2.0-liter Skyactiv gasoline engine and new Skyactiv automatic and manual transmissions in its mid-cycle freshening for the 2012 model year. The Mazda3 sedan with Skyactiv engine has a 40 mpg highway fuel- economy rating from the EPA.
Mazda had already approved a 25 percent boost in advertising spending for the North American market to support the company's aggressive sales target. Spokesman Barnes said that the company's advertising and marketing plans are still in place and have not been affected by any cost-cutting efforts.
MAZDA MEMO TO EMPLOYEES
March 7, 2012
Dear Mazda Colleague,
This morning at our town hall meeting I talked about Mazda being in the midst of an extremely challenging business environment. As I said, while I am confident we can and will overcome these challenges, it has become necessary for us to reexamine our business to accelerate further cost improvements.
This has forced us to take a hard look at MNAO's U.S. organization to see how we can make it even more efficient through restructuring and reducing our workforce.
This restructuring process will consist of three phases.
Enhanced Voluntary Separation Process: – Separation pay, outplacement, a lump sum payment based on length of service, and enhanced healthcare/vehicle benefits. Employee's election of a voluntary package does not guarantee acceptance by MNAO. MNAO will review all voluntary employee elections and determine, based upon business needs, which employees will receive the voluntary package.
Redeployment Process: - New organization structures will be designed reflecting reductions. Employees may be placed into the new structure.
Involuntary Process: – If we don't achieve our cost objectives via the voluntary separation, we will have an involuntary lay off process. Involuntary separations will not include the enhanced benefits contained in the voluntary program.
Further details will be provided beginning Thursday, March 15 during one on one meetings between supervisor and employee. Employees will receive a one page overview of their individual package comparing the voluntary and involuntary packages.
The timeline below provides key information and dates:
Voluntary package details shared at individual employee meetings: 3/15
Employees determine if they will accept a voluntary package: 3/15 – 4/16
Employees receive a Response Required email to accept or decline voluntary package: 4/16
Employees last day to accept or decline voluntary package via email: 4/20
MNAO decisions on accepting employee voluntary package elections: 4/21 – 4/27
Employees are notified whether their voluntary separation package election was accepted: 4/30
Voluntary separation employees will work through 7/2
MNAO places employees into new US organization structure: 5/16 – 5/27
MNAO notifies involuntary separation employees: 5/29 – 6/1
Involuntary separation employees will work through 8/3
If you have any questions during this process, please contact your supervisor or your HR Business Partner.
James J. O'Sullivan
You can reach Dave Versical at firstname.lastname@example.org.