Nissan has announced a drastic restructuring plan that includes cutting 20,000 jobs globally and closing seven factories. This decision comes in response to significant financial losses and declining sales in key markets, particularly in the U.S. and China. The company aims to streamline operations and focus on profitability as it navigates a challenging automotive landscape.

Key Takeaways

• Nissan will cut 20,000 jobs, representing 15% of its workforce.
• Seven factories will be closed as part of the restructuring plan.
• The company reported a net loss of 671 billion yen ($4.5 billion) for the last fiscal year.
• The restructuring aims to save 500 billion yen ($2.6 billion) by 2027.
• The company is shifting focus from volume to profitability under new CEO Ivan Espinosa.

Overview of Job Cuts and Factory Closures

Nissan’s decision to cut jobs and close factories is part of a broader strategy to address its financial struggles. The company has faced a tumultuous year, with a reported 88% drop in operating profit and a significant decline in sales in both the U.S. and China. The latest round of job cuts follows a previous announcement in November 2024, where 9,000 jobs were slated for elimination.

The job cuts will primarily affect manufacturing, sales, administration, and research and development roles. While the specific factories targeted for closure have not been disclosed, the company has indicated that its Sunderland plant in the UK, which employs around 6,000 workers, is not likely to be affected.

Financial Challenges Facing Nissan

Nissan’s financial woes stem from several factors:

1. Weak Sales: The company has experienced declining sales in its two largest markets, the U.S. and China, where competition has intensified.
2. Failed Merger Talks: A proposed merger with Honda collapsed earlier this year, which would have created a significant automotive powerhouse.
3. Rising Costs: Increased variable costs and tariffs, particularly from the U.S. trade policies, have further strained the company’s finances.

The company reported a staggering net loss of 671 billion yen for the fiscal year ending March 2025, highlighting the urgent need for restructuring.

Strategic Shift Under New Leadership

With the appointment of Ivan Espinosa as the new CEO, Nissan is pivoting its strategy to prioritize profitability over production volume. Espinosa emphasized the need for a robust recovery plan, stating, "We must prioritize self-improvement with greater urgency and speed."

The restructuring plan aims to reduce the number of manufacturing plants from 17 to 10 by 2027, which is expected to streamline operations and cut costs significantly. Additionally, Nissan plans to overhaul its supply chain by sourcing parts from fewer suppliers, further enhancing efficiency.

Implications for Employees and the Automotive Market

The job cuts and factory closures will have significant implications for Nissan’s workforce and the broader automotive market. Approximately 20,000 employees are at risk of losing their jobs, which could impact local economies, especially in regions where Nissan has a strong presence.

As Nissan navigates these changes, the company is also looking to adapt to the evolving automotive landscape, particularly with the rise of electric vehicles and changing consumer preferences. The future of Nissan will depend on its ability to innovate and respond to market demands while managing its operational costs effectively.

In conclusion, Nissan’s restructuring plan marks a critical juncture for the company as it seeks to regain its footing in a highly competitive industry. The coming years will be pivotal in determining whether these measures will lead to a successful turnaround or further challenges ahead.

Sources

• Nissan to shut seven factories, cutting 20,000 jobs worldwide | Nissan, The Guardian.
• Nissan to cut 11,000 more jobs and shut seven factories, BBC.
• Nissan shutting down plants, cutting jobs. Will Tennessee be impacted?, The Tennessean.