Murata to Eliminate 3,000 Temporary Jobs in Japan to Combat Yen's Strength
Tsuneo Murata, president of Murata Manufacturing Co.
Tetsuya Yamada/Bloomberg
Tsuneo Murata, president of Murata Manufacturing Co.
Tsuneo Murata, president of Murata Manufacturing Co. Photographer: Tetsuya Yamada/Bloomberg
Murata Manufacturing Co., the maker of a third of the world’s ceramic capacitors, devices used in flat-panel televisions and smartphones, will eliminate most of its temporary workforce and increase production overseas as the Japanese yen’s strength forces it to reduce costs.
The company plans to cut its contract workforce to about 1,500 from 4,500 and will move some factory equipment abroad to reach its target of 30 percent overseas production by fiscal 2012, President Tsuneo Murata said yesterday in an interview. The company had 34,000 full-time workers worldwide as of March.
Companies such as Toyota Motor Corp. and Panasonic Electric Works Co. are increasing production abroad to stay competitive as the strong yen erodes profits. Japan this month intervened for the first time since 2004 to weaken the yen after it rose to a 15-year high against the U.S. dollar.
“Manufacturers in South Korea and other parts of Asia are catching up technologically,” said Akiko Yamaga, an analyst at Mizuho Investors Securities Co. in Tokyo who has a “neutral plus” rating on Murata. “If you stick too much to Japan, you lose your competitive edge.”
The yen has gained almost 10 percent against the dollar this year and traded at 83.81 as of 12:33 p.m. in Tokyo. A stronger yen hurts overseas income at Japanese companies when converted into their home currency.
Capacitor Leader
“We have to reduce the number of temporary workers in Japan,” said Murata, whose grandfather started the company in Kyoto in 1944 as a manufacturer of radio parts. “We never thought the yen would become this strong.”
The company is now the world’s biggest maker of ceramic capacitors, devices that regulate electrical current, and employed as many as 5,000 temporary workers before the 2008 financial crisis sapped demand for electronic parts.
In Japan, temporary employees are workers sent by agencies to fill positions and don’t have the same rights as regular company employees. The cuts would bring the number of domestic temporary workers back to the same level as immediately after the collapse of Lehman Brothers Holdings Inc., according to Murata, 59.
Murata said there was “no choice” but to move the company’s automated production machines to plants in China and Thailand, where operating and personnel costs are lower.
“We want to expand overseas production in line with the targets in our three-year plan,” he said.
The company manufactures about 15 percent of its products overseas and will begin production at a new Chinese plant for capacitors in Wuxi, Jiangsu Province, from April next year, according to Harumi Sekiguchi, a spokeswoman for the company.
Return to Profit
Murata in July reported net income of 15.5 billion yen ($184 million) for the three months ended June 30, compared with a loss of 3.67 billion yen a year earlier, as sales surged 31 percent. It raised its profit forecast for the year ending March by 18 percent to 52 billion yen.
The stock rose 1.4 percent to 4,410 yen as of 12:51 p.m. on the Osaka Securities Exchange. It has gained 7.3 percent in the past 12 months, compared with a 5.3 percent decrease in Japan’s Nikkei 225 Stock Average.
To contact the reporter on this story: Adam Le in Osaka at ale14@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net
To contact the editor responsible for this story: Drew Gibson in Osaka at dgibson2@bloomberg.net.
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