Japan's TDK to cut 8,000 jobs, BoJ fights credit crunch

TOKYO: Japan's TDK Corp. said Thursday that it was cutting 8,000 jobs and closing four plants overseas as the worsening economic crisis prompted fresh emergency action by the central bank.

The electronic component maker warned it expects a net loss of 28 billion yen (301 million dollars) for the financial year to March 2009 due to weak sales and the stronger yen.

"There was a sharp drop in orders, which overwhelmed our expectations," TDK president Takehiro Kamigama said.

Companies around the world are slashing jobs to cope with weak consumer spending in recession-hit major economies.

Japan Airlines, facing a profit slump this year, expects to shed 1,640 jobs by March 2011 as part of efforts to boost efficiency, a company spokesman said.

JAL will shrink the workforce at its main international unit through reduced hiring and natural attrition, said company spokesman Stephen Pearlman.

Japanese companies have announced thousands of lay-offs, mostly among contract or temporary employees, in recent weeks in response to the economic crisis, shattering the myth that a job is for life in Asia's largest economy.

In the latest bid to unblock credit flows and ease a recession, Japan's central bank said it was lending 1.225 trillion yen (13.2 billion dollars) to financial firms

"The central bank will continue providing capital proactively to the market to ensure the stable management of small- and mid-size companies," Bank of Japan governor Masaaki Shirakawa said in parliament.

Although Japanese banks have been less severely hit so far by the global credit crunch than many of their Western counterparts, they have grown more reluctant to lend due to weak financial markets.

The BoJ has little room to reduce its rock-bottom interest rates further so it is seeking alternative tools to repair credit markets that have been battered by the global financial crisis.

On December 19, it slashed its key rate to just 0.1 percent to cope with the worsening global slowdown.

TDK, which bought German electronic component maker Epcos last year, said it expected orders to remain weak in the last fiscal quarter and for the yen to stay strong, reducing its overseas earnings.

Previously TDK, whose products include electronic components and magnetic heads for hard-disk drives, had been anticipating an annual net profit of 25 billion yen, down from 71.46 billion yen a year earlier.

It cut its revenue forecast to 673 billion yen from 795 billion.

As well as the plant closures, it will shut one research and development centre overseas and scrap unprofitable products. It did not say where the plants or centre were located.

The restructuring would cost 15 billion yen and boost annual operating profit by 62.9 billion yen, Kamigama said.