Sony to Axe 20,000 Jobs Worldwide

Sony today said it would axe 20,000 jobs, including 7,000 in Japan, to stem a slide in profits.

The job cuts - about 13% of its global workforce of 154,500 - will be spread over three years and cost the company 335bn yen (£1.8bn). Sony, battling against Asian rivals, hopes to reach an operating profit margin of 10% and slash annual fixed costs by 330bn yen by 2006/07.

Following the announcement by the electronics giant, trade union officials representing British workers were seeking meetings with management about the job cuts.

A spokesman for Amicus, which represents Sony workers in the UK, said: "We will be seeking urgent meetings with the company to find out more information about this announcement and we will do all we can to try to avoid compulsory redundancies."

Malcolm Bruce, the Liberal Democrat spokesman on trade and industry, also voiced concern over Sony's job cuts.

"Sony's UK workforce of 4,500 will be greeting this news with great trepidation. The sooner Sony can supply regional breakdowns of their restructuring plans, the better," Mr Bruce said. "In fast moving, high tech markets there is high price to pay for the mistakes and missed opportunities that lead to observers judging Sony's product lineup stale. Unfortunately, it is the workforce that finishes up paying."

But in one positive development for British employees, Sony Europe plans to bring together its consumer audio visual marketing groups to one location in Britain.

Sony has been hit by cheaper rivals such as Samsung of South Korea and Dell of the US which have eroded success in audio equipment, computers, TVs and other gadgets. Sony has also fallen behind domestic rivals such as Sharp in liquid crystal display TVs, which are growing in popularity around the world, as well as Matsushita, which makes the Panasonic brand in DVD recorders.

The company that produced such iconic products as the Walkman shocked investors in April with a quarterly loss of almost $1bn (£590m). In the three months to September sales rose 0.4%, the first rise in nine months, but profits were 25% lower than a year before at 32.9bn yen.

As part of the restructuring, Sony announced a $2bn joint venture to make flat screens for televisions with Samsung. The deal would give Sony a steady supply of LCD screens for TVs - a growth area for its electronics division.

The venture will begin full production in mid-2005 and be run by an executive from Samsung, the world's second-largest maker of LCD panels. Sony also said it would hive off its financial units - Sony Life Insurance, Sony Assurance and Sony Bank - into a holding company to be established in April.

Sony will seek to re-establish its reputation for innovation by spending a total of 1 trillion yen on semiconductor investment and research and development over the next three years that will provide the basis for next generation TVs and display devices.

"This could be considered like a stepping stone, a building of a new foundation. It's nothing surprising, but it's important that Nobuyuki Idei (chief executive) is taking these steps," John Yang, an analyst at Standard & Poor's in Tokyo, told Reuters. "It all shows that Sony does have a sense of urgency now."