Terrie’s Take on how NJ workers are the first to go in adverse economic conditions
Terrie’s Take November 3 on how economic downturn is affecting Japanese companies: First to go have been the foreign workers in overseas plants. Two weeks ago, Nissan announced that it would cut its workforce by 1,680 people at its Barcelona assembly plant — one of two major plants the company has in Europe. This is almost 1/3 of all the people working at that facility and represents the halting of one of the 3 production shifts. Sales of vehicles in Spain have plunged 24% in the last 9 months, and when the numbers finally come out at the end of the year, we expect that sales for this current quarter might be almost non-existent. Indeed, Peugot has said that it expects a 17% fall in auto sales in Q4 in Western Europe. We think the final numbers will be worse and Japanese firms will share blood shed.
Certainly Toyota knows this, and so the company is laying off another category of “outsiders” — non-permanent workers at its factories here in Japan. Apparently the company employs 6,800 contract workers, also known as fixed-term workers, a number which is 2,000 down from March and 4,000 down from the peak of 10,800 employed in 2004. Back then, non-permanents accounted for 30% of the company’s total workforce. The thing about these contract workers is that so long as they are employed for less than 36 months, then the company can flexibility lay them off in times of hardship — as will many other companies around the country now that Toyota has set the pace.
In addition, in Q2, June-August this year, Toyota laid off an extra 8,000 temporary workers — for a total of around 10,000 redundancies so far this year. Are you seeing these numbers in the major newspapers? Not really. This is probably because Japan’s number one advertiser is sitting on an estimated JPY4trn (US$40bn) of cash reserves (not including other assets) which make it difficult for the company to defend its actions in the Japanese context of being needed to be seen to be looking after your own. In this respect, the message clearly is that you need to be a full-time employee to be considered “one of the Toyota family”. Otherwise you’re just a squatter…
So, given that there are at least 755,000 foreigners (as of 2006) working here in Japan, and probably another 350,000 or so working illegally, you can bet that this group will be another at-risk segment to lose their jobs. The AP article says that the government HELLO WORK centers used to get about 700 foreigners looking for jobs each month, but in August due to the massive layoffs by auto manufacturers, the numbers of foreign newly jobless people doubled to 1,500 a month. Local officials note that the number of Japanese applicants has not changed appreciably (yet) — so clearly Toyota, Honda, and Yamaha are dumping on their Brazilian-Japanese and Chinese workers first.