Toshiba’s privatisation had been expected to lay the groundwork for sweeping changes, and the company duly made them this week in the form of mass job cuts and a new strategy.
It announced on Thursday (May 16) that it would cut up to 4,000 jobs as part of its restructuring. The storied company, which delisted in December after a ¥2 trillion ($13 billion) takeover by private equity firm Japan Industrial Partners (JIP), is revamping its business with a bang.
The combination of Vice President Koji Ikeya, a former Mitsubishi Motors CFO whose tenure coincided with job cuts at the automaker, and a bottom-line-focused private equity firm means that Toshiba is now helmed by a leadership well-practised in cost-cutting measures, which in this case is concentrated on the older, higher-salaried portion of its workforce through an early retirement incentive program.
“There’s no surprise that they’re doing this kind of short-term financial restructuring,” said Go Matsumoto, senior managing director for corporate finance at FTI Consulting, noting that the cuts were made possible by the buyout and privatisation of the company.
“The scale would be surprising if it happened at a listed company — there would be a big impact on stock prices. They could only (carry out) very dynamic layoffs once they delisted,” he said.
Tokyo-headquartered JIP, which was established in 2002 and is led by co-founder and CEO Hidemi Moue, has long maintained a low profile despite its involvement with household names such as Olympus, from which JIP acquired the company’s imaging business in 2021.
“As Japanese industry undergoes structural transformation and restructuring in the face of global competition, there is a strong likelihood that new business opportunities will also open up if only companies can break free of their current restraints,” JIP states in its company vision.
While in the past private equity firms were viewed as hagetaka (vultures) for their mercenary approach, structural developments — like the Tokyo Stock Exchange placing pressure on Japanese companies to deliver greater returns to investors and improve competitiveness — have led to suggestions by analysts that their image may be changing and that a new age of private equity may be upon Japan.
Toshiba may also be on the cusp of its own image overhaul, following a number of reputational blows over the years.
In its “Revitalisation Plan” released Thursday, Toshiba emphasised its reduction of resource duplication and a profitability push. It also detailed hybrid and remote work options for workers, a new graduate hiring drive and plans to dedicate staffers to work on generative artificial intelligence.
Planned growth in the semiconductor sector and a focus on decarbonization were also stated, along with a plan to improve profit margins and relocate its head office from Tokyo to Kawasaki.
While news of the job cuts has dominated headlines, Matsumoto said the coming months are likely to see Toshiba delivering details of its strategy for key business areas. He said further mass job cuts are not likely in the immediate future.
“I think the bad news is already delivered,” he said. – Japan Times
