Mazda is counting on the new, SkyActive-based CX-5 to begin its turnaround.
With its parent company preparing for its worst losses in more than a decade, Mazda Motors of America will begin the first in a series of what have been described as “substantial” job cuts this week.
Though the maker has declined to discuss precise numbers, the first step will come tomorrow when Mazda discloses details of a first round of “voluntary” layoffs. The maker is expected to follow with additional, involuntary cuts by sometime in April, according to sources familiar with the plan.
The move is the result of “the global headwinds” the company is facing, spokesman Jeremy Barnes confirmed earlier this month.
The Japanese maker has forecast a loss of about 100 billion yen, or $1.2 billion, for the fiscal year ending March 31, its worst deficit in 11 years. Mazda Motor Corp, CEO Takashi Yamanouchi recently revealed plans to raise as much as 150 billion yen through a new stock sale needed to replenish its coffers.
The losses were driven by several factors including the March 11, 2011 Japanese earthquake and tsunami, which reportedly cost Mazda $433.2 million in overall losses – the fourth-largest figure reported by any of the Japanese makers. Production cuts caused by the disaster totaled about 80,000 units.
Compounding the situation are lopsided exchange rates which have dipped as low as 76 yen to the dollar – though they have risen to a still challenging 83 yen in recent days.
That has led many of Mazda’s competitors to shift production from Japan to other parts of the world less impacted by the weak dollar — but the troubled maker actually will increase its dependence on home market production when it pulls out of its long-standing Michigan joint venture with Ford Motor Co., shifting assembly of the Mazda6 to a Japanese plant.
Ironically, MMA has been doing reasonably well gaining traction as the U.S. automotive market recovers, Mazda outdoing the overall industry upturn with a 48% sales gain during the first two months of 2012.
But the maker is reining in costs at every opportunity, down to canceling media receptions at the upcoming New York Auto Show.
“It’s a very tenuous situation,” cautioned George Peterson, of AutoPacific, Inc., adding that he expects the job cuts to be “substantial.”
Mazda plans to begin on Thursday by offering buyouts to an unspecified number of its 701 U.S. employees. Depending upon how many workers accept those offers it is expected to follow up with mandatory termination notices to other employees in the following weeks.
“The smaller, second and third tier Japanese makers are having a hard time of it now,” stressed analyst Peterson, adding that Mazda will have to hope that its new SkyActiv technology – now being introduced in the form of the CX-5 crossover – can help turn around its fortunes.