TOKYO - Pain now, gain later.
Economists and analysts are shrugging off news that Mitsubishi Motors Corp. is joining Nissan Motor Co., and numerous other Japanese companies, in slashing jobs.
The wave of restructurings across corporate Japan was anticipated, and will not lead to the trimming of already weak forecasts for car sales in Japan, they said.
'Yes, there will be job losses,' said Stephen Usher, Tokyo-based auto analyst for Jardine Fleming Securities (Asia) Ltd. 'But we think this will revitalize Japanese industry.'
Economists expect increasingly widespread job cuts to push Japan's unemployment rate to a record 5 percent and above soon, up from 4.7 percent now. If measured by U.S. methods, it would probably be twice that.
On the other hand, the Japanese government plans yet another round of pork-barrel spending. National elections must be held within the next 12 months, and politicians want a better economy when voters go to the polls.
Mitsubishi Motors Corp. said it is in the midst of a six-year program of paring its headcount by 12,400, or 14 percent, compared to average levels in the fiscal year to March 1998 (see box).
Of that, 4,000 will be cut at the parent company, and the remaining 8,400 at Japanese dealerships, overseas operations and other subsidiaries.
BEYOND AUTO INDUSTRY
Mitsubishi spokesman Fumio Nishizaki said he couldn't say how the planned spinoff by the end of 2001 of the automaker's truck operations into a new venture to be owned 19.9 percent by AB Volvo would affect the job-cut targets. 'We haven't set the details yet' for the spinoff, he said.
Mitsubishi earlier said that its cuts within Japan would fall on its nonmanufacturing work force. Outside Japan, Mitsubishi has cut 1,200 jobs in Thailand, and is cutting 1,000 jobs in the United States and 300 jobs in Australia.
Nissan COO Carlos Ghosn told analysts that of Nissan's planned 21,000 job cuts, 16,500 will come in Japan, 2,400 in Europe, 1,400 in the United States and 700 in Mexico and other markets, Usher said.
The job cuts at Japan Inc. go well beyond the auto industry, however. Indeed, in October alone, major Japanese companies announced restructuring plans that will cut their work forces by at least 97,800 (see box above). Most of the cuts will take place within Japan.
To be sure, the cuts could produce a much stronger Japan in the future, just as the American economy emerged leaner and more competitive after wholesale restructurings and job cuts in the early 1990s. But for now, the pain is real.
A recent survey of 841 homeless by the city of Kawasaki found that 92, or 13 percent, used to be white-collar workers. Of those, 25 lost their posts when their company went bankrupt, while 14 were restructured out of a job. By age, 50 were in their 50s, 17 in their 60s, and 24 in their 40s.
LEADERS SHOW CONCERN
Prime Minister Keizo Obuchi and other leaders have expressed concern about the impact of Nissan' s cuts, often adding that Nissan should take some responsibility for the social ramifications of workers losing their jobs.
'I can understand the company's stance, but I'm worried about the impact on jobs and on subcontractors,' Takashi Fukaya, Minister of International Trade and Industry, said at a news conference.
Greg Ornatowski, Japan auto analyst at Standard & Poor's DRI Global Automotive Group, said he does not plan to revise his Japan light-vehicle forecast, which calls for sales to be flat this year, up 1 percent in 2000, and up almost 5 percent in 2001.
Sales of heavy commercial vehicles, he said, will drop about 4 percent this year from 1998's 30-year record low, and then will edge up 1 percent in 2000 and rise almost 10 percent in 2001.
As Japan's carmakers continue to shift output to Asia, North America and Europe, however, falling exports will keep Japan-based auto production on a downward trend, even if the Japanese economy improves, he said.
That will keep the pressure on companies to continue trimming their work force in Japan, he said.