Mazda releases memo announcing major US cost restructuring, layoffs

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Close-up of the front grille of a Mazda Kiyora. The Mazda emblem is visible.

Mazda is preparing for major layoffs in the U.S. (Photo Credit: CC BY-SA/Katsuhiro Osabe/Flickr)

Four straight years of losses have devastated Mazda Motor Corp., reports Automotive News. As a result of it hemorrhaging cash, the Japanese automaker plans to offer voluntary buyout packages to scores of U.S. workers. Additional Mazda layoffs may also result, as the automaker seeks to slash operating costs.

Mazda struggles to uncover cost improvements

Jim O’Sullivan, CEO of Mazda North American Operations, didn’t sugar coat the problems the automaker is facing in a March 7 corporate memo obtained by Automotive News. Mazda reportedly has 701 U.S. employees.

Mazda is mired “in the midst of an extremely challenging business environment,” and that means “it has become necessary for us to re-examine our business to accelerate further cost improvements,” said O’Sullivan.

[Learn where to buy a Mazda car]

According to various sources, Mazda spokesman Jeremy Barnes corroborated O’Sullivan’s statement that the automaker is planning to make cost improvements.

Japan loses $1.2 billion

Financial problems at home have rippled across the ocean into Mazda’s U.S. operations. A recent financial disclosure from the automaker’s parent office noted that as the current fiscal year ends on March 31, Mazda expects to post a loss of 100 billion yen ($1.2 billion). Automotive News reports that this would be the automaker’s largest financial loss in 11 years. Analysts indicate that the reason for Mazda’s record slide is connected to a strong yen value, a financial stumbling block for such an export-dependent automaker.

Layoffs planned despite US sales increase

While Mazda’s North American sales have reflected an increase over the first three quarters of the current fiscal year – vehicle sales are up 48 percent in the U.S. over the past 12 months – the overall damage to Mazda’s finances of late has made drastic action necessary, according to the automaker’s corporate leadership.

Phases of the Mazda layoffs

Changes to Mazda USA’s cost structure will be carried out in three distinct stages, according to the recently released corporate memorandum. They are as follows:

  1. Voluntary separation packages will be offered to a select portion of Mazda’s U.S. workforce. This will include separation pay, a lump-sum payment sized with relation to number of years served and future job acquisition assistance. Those Mazda employees who are interested in accepting the early retirement package must apply by April 16, 2012. By April 27, the automaker will determine whether applicants are eligible to take advantage of the voluntary package.
  2. Starting with May 16, 2012, certain Mazda employees will be entered into a redeployment system. This system is designed to “restructure the organization to reflect a smaller work force.”
  3. Beginning May 29, 2012, Mazda will analyze the crop of remaining U.S. employees if not enough of them were downsized in steps one and two. Depending upon the automaker’s financial needs at this stage of the restructuring, Mazda will designate a certain number of workers for involuntary separations. Employees notified during this phase will not be eligible to receive the same enhanced benefits package that was offered during the voluntary separation phase of the company’s cost restructuring. These workers will remain in their jobs until August 3.

Mazda’s Jim O’Sullivan at the 2011 Los Angeles Auto Show

Sources

Automotive Business Review

Automotive News

Car and Driver

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