Japanese consumer electronics maker Pioneer Corp said on March 23 that it would cut 5 percent of its group workforce and shutter about one-fourth of its factories to help it recover from a deep earnings slump. Pioneer, which is forecasting a group net loss of 8 billion yen ($75.80 million) in the current business year due to steep price declines in plasma televisions, DVD recorders and audio equipment, also scaled back expectations for next year.
Having been considered a winner in the digital electronics market up until a little over a year ago, Pioneer has come to symbolise how quickly fortunes can change in an industry marked by sliding prices and growing competition from low-cost rivals.
"We have been trying to position our products for the high-end, value-added segment of the market but that strategy has become very difficult to implement because of commoditisation," Pioneer President Kaneo Ito told a news conference. The company, the world's fourth-largest plasma display maker after LG Electronics, Samsung SDI and Matsushita Electric Industrial, expects a profit margin of below 1 percent and sales of 730 billion yen this year.
Pioneer said the new restructuring plan, which also calls for the company to use more common components, cut lead times and narrow the number of models it produces by 10 percent, would lead to annual cost savings of 30 billion yen in 2006/07. Ito predicted one-off restructuring costs of 15 billion yen.
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