Toshiba is considering a significant reduction in its domestic workforce, with plans to cut approximately 5,000 jobs, which accounts for about 7 per cent of its total workforce in Japan, according to a report by Nikkei Asia. These reductions, focusing primarily on back-office roles within the company's headquarters, will be achieved through voluntary retirements. This move marks the largest cut in personnel since the 2015 scandal over accounting irregularities.
Financial Repercussions According to the report, the workforce reduction is expected to result in a loss of roughly 100 billion yen ($646 million), attributed to special retirement benefits and outplacement services. This restructuring aligns with Toshiba's broader strategy to consolidate operations by reintegrating its energy, infrastructure, devices, and IT business units into the main headquarters, eliminating duplicated divisions and aiming for streamlined operations.
Financial Strategies
After its delisting from the Tokyo Stock Exchange in December, following a buyout led by the Japan Industrial Partners (JIP) consortium, Toshiba is under significant pressure to stabilize its financial standing, the report claims. The company is grappling with the need to repay hefty debts accrued during the acquisition process, where JIP covered 1.4 trillion yen of the 2.4 trillion yen buyout sum through bank loans, using Toshiba’s assets as collateral.
Future Outlook
Looking ahead, Toshiba is not only focusing on immediate financial recovery but also on long-term strategic growth. President Taro Shimada has outlined plans to enhance business value through data-centric strategies and innovations in artificial intelligence and quantum technology. Furthermore, Toshiba has recently inaugurated a new research and development hub to advance these technologies. JIP's strategy includes possibly relisting Toshiba's shares within the next five years, aiming to capitalize on these restructuring and innovation efforts by eventually exiting its investment through a public offering.
The upcoming discussions with Toshiba's labor union will be crucial, as they will finalize the details regarding the extent and specifics of the job cuts, which are set to be a pivotal component of Toshiba’s midterm management plan due in May.