On Wednesday, March 4, 2009 NEC LCD Technologies, a NEC subsidiary, announced structural reforms to improve LCD production efficiency and global operations. NEC will be consolidating two LCD fabrication plants and cutting its staff by 50%.Â
NEC said it will close its Kagoshima LCD plant at the end of December 2009 and transfer production to its Akita plant to improve production efficiencies and reduce costs. The company has decided that LCD production for industrial and medical applications will need to be reduced. In January, NEC mentioned that it was looking for ways to exit the industrial LCD business.Â The current monthly production capacity at the two LCD fabs is 218,000 panels (14″ equivalent in size). The current production level will be maintained after the plant consolidation to Akita is completed. NECÂ stated there will be no LCD supply disruptions for existing products due to the LCD plant consolidation.
Staffing will be reduced from 1,190 to about 600 by the end of March 2010, achieved primarily through a voluntary retirement program. Kagoshima factory employees that refuse to be transfered to Akita may be asked to quit. The company plans to reduce its worldwide workforce by 20,000 including 10,000 regular employees. Part ofÂ Kanagawa headquarters’ operations will also be transferred and consolidated within the Akita plant.
â€œNEC LCD Technologies remains committed to the growth of our LCD business, to the industrial markets that we serve and to our valued customers and partners that have helped us achieve a leading position in the market.Â Our worldwide business strategy remains unchanged and with the current restructuring we expect to further strengthen our competitive position in the market,” Toshihiko Ueno, president of NEC LCD Technologies, said in a statement.
NEC LCD Technologies was forced to reduce fixed costs due to losses associated with an unfavorable foreign exchange environment. With no short-term economic recovery and deteriorating demand for LCD products caused by the global economic crisis NEC responded by consolidating its LCD production. Compared to the JPY22.7 billion profit in the prior fiscal year, the company expects a net loss of JPY290 billion in the current fiscal year that ends in March 2009–the largest loss in seven years.Â