Nissan’s Restructuring Efforts: Job Losses and Factory Shutdowns Amid Market Challenges

Nissan has announced a major restructuring of its global operations, which includes cutting 11,000 jobs and closing seven factories. The automaker is responding to persistent challenges, including declining sales and increasing competition, which have significantly impacted its performance in key markets.

The company has faced severe difficulties in both its largest markets: China and the United States. In China, where competition from local manufacturers has intensified, Nissan has struggled to maintain market share. In the US, rising inflation and interest rates have slowed down vehicle sales, further contributing to the company's financial struggles.

These latest job cuts bring the total number of employees laid off in the past year to around 20,000, representing 15% of Nissan’s workforce. The company is working to streamline its operations and regain stability as it faces ongoing pressure from both global and local competitors.

Though the company has not disclosed the exact locations of the job cuts, there is uncertainty regarding the future of its plant in Sunderland, where about 6,000 people are employed. As part of the restructuring, the company is reviewing its global production footprint to ensure long-term viability.

The majority of the job reductions will come from the manufacturing sector, with a smaller portion affecting sales, administration, research, and contract staff. Nissan’s CEO, Ivan Espinosa, emphasized the need for these tough decisions to align the company with current market realities.

This restructuring follows a previous announcement in November when Nissan revealed it would cut 9,000 jobs as part of a broader cost-saving initiative. This measure was designed to reduce global production by 20%, marking a significant shift in the company’s strategy to cope with declining earnings.

Earlier in the year, Nissan also attempted a merger with Honda and Mitsubishi in an effort to bolster its position against growing competition, particularly in China. However, those negotiations fell apart in February after the companies were unable to agree on a multi-billion-dollar deal.

Had the merger succeeded, it would have created a massive $60 billion automotive giant, ranking as the fourth-largest carmaker globally. The collapse of the merger talks, however, left Nissan without the strategic partnership it had hoped for, adding to the company’s sense of uncertainty.

In addition to these setbacks, Nissan reported a staggering annual loss of 670 billion yen ($4.5 billion). The company cited rising operational costs and the impact of US tariffs as key factors contributing to its financial woes, further highlighting the difficult environment Nissan is navigating.

CEO Espinosa acknowledged that the past year had been one of the company’s most challenging, with higher costs and an unpredictable market environment. He referred to the recent results as a "wake-up call" and emphasized the need for a drastic shift in strategy to overcome the current obstacles.

To further reduce costs, Nissan has canceled plans to build a battery and electric vehicle factory in Japan. The company’s scaled-back investment strategy is aimed at addressing the growing pressures on its financial performance and aligning its resources with the changing market dynamics.

Nissan’s difficulties extend beyond its home country, as the company faces intense competition from local manufacturers in China, such as BYD, which has become a dominant force in the electric vehicle sector. With the global shift toward electric vehicles, foreign carmakers like Nissan are finding it increasingly difficult to maintain their footing in the rapidly evolving market.