Olympus to cut more jobs amid compact camera crash (update Monday 19 May)
May 16, 2013
Picture: Olympus is to dump low-end compacts in favour of higher-end models such as the XZ-1
The iconic camera maker has axed around 30% of its imaging staff inside 12 months – equating to almost one in three jobs since March 2012 – according to a statement accompanying financial results released on Wednesday (see below).
Though Olympus says the imaging division cuts have already taken place, this is the first time it has publicly revealed the 30% figure.
[UPDATE MONDAY 20 MAY: Olympus has confirmed to AP that the decision to cut 3,400 jobs came after the firm announced 2,700 jobs were to go from the entire group as part of its medium-term business plan unveiled last year. The cuts are part of a plan to ‘turn around the imaging business’. It is unclear how many of the ‘2,700’ are included in the 3,400 figure, as Olympus will not say.]
At the time of writing, the extent of further cuts remained unclear as Amateur Photographer sought clarification following material presented by Olympus president Hiroyuki Sasa in Tokyo on 15 May.
[UPDATE MONDAY 20 MAY: Olympus Japan has declined to disclose the extent of future job reductions, saying it will depend on results and future business scale.]
Separately, Olympus has indicated that more job cuts at the imaging business will follow, but it has not provided details.
However, it is understood that future job losses will not be on the same scale.
Olympus Tokyo spokesperson Hiroko Kuno told Amateur Photographer on 17 May: ‘We will further reduce in order to switch to cost structure as appropriate [for] our business scale…’
Olympus currently employs 7,900 people at its imaging division compared
with 11,300 a year ago, confirmed the spokesperson.
Last year, the group said it planned to slash 2,700 positions as part of a medium-term business plan. So far, 1,900 of these jobs have gone.
The Olympus group – which includes a profitable medical equipment
division – has shed a total of around 6,300 jobs, including part-time
workers, many through the sale of business assets.
Olympus has confirmed plans to end production of ‘low-price’ compact cameras – cementing a strategy first revealed in 2012 – and continue to focus resources on mirrorless interchangeable-lens models.
The move away from low-end compacts, towards high-end models, will not tax Olympus’s existing manufacturing processes, according to Toshi Terada, Olympus’s SLR products planning manager.
Speaking on Tuesday, he said such facilities were put in place for the launch of the Olympus XZ-1 compact in 2011, and can easily be altered to suit future models.
‘Now we can concentrate on high-value compact cameras to compete with smartphones,’ he told journalists at a meeting of the European Imaging and Sound Association, in Brussels, Belgium attended by Amateur Photographer news editor Chris Cheesman.
Olympus Tokyo has outlined the consolidation of ‘five [manufacturing] sites into two’ – focusing on plants at Shenzhen in China, and Vietnam.
[UPDATE MONDAY 20 MAY: Olympus says consolidation of its manufacturing sites is ‘currently in progress’]
It also announced a consolidation of its overseas sales bases and a reduction in sales channels, to boost efficiency.
The scale of the imaging division job cuts were revealed for the first time in this graphic, published
on the Olympus Japan website this week. It accompanied a presentation by
Olympus president Hiroyuki Sasa, in a document entitled ‘Management
Policies (Fiscal Year Ended March 2014-2017)’
At 31 March 2013, the Olympus group employed 32,900 people.
In 2011, the firm employed 44,000 staff worldwide, according to its former CEO Michael Woodford in an interview.
Back in black, mirrorless future
On a positive note, however, the group returned to the black for the year to 31 March 2013 – 18 months after it was rocked by a huge accounting scandal exposed by former Olympus CEO Michael Woodford.
And while it predicts a 30% fall in compact camera revenue, Olympus expects interchangeable-lens camera sales to rise more than 32% over the next year.
Olympus admits it significantly underestimated the slide in compact camera sales, which were 37% less than forecast, and failed to respond quickly enough to market changes.
The company expects to sell around 50% fewer compacts this year (2.7 million) than it sold over the previous 12 months (5.1 million).
Olympus Tokyo HQ Olympus blamed the ‘popularity of smartphones’ for the ‘sharp contraction’ – triggering plummeting sales and falling prices.
The operating loss at Olympus’s Imaging Systems business more than doubled over the 12 months, despite cost reduction efforts, the firm said.
It recorded an operating loss of more than 23 billion yen, compared to 10.7 billion yen the year before. Net sales dropped 16.3%.
The firm hopes to further cut costs in a bid to wipe out the operating loss at its imaging division and ‘break even’ by March 2014.
Olympus reported a consolidated profit of around 8 billion yen, compared to a loss of almost 49 billion yen a year earlier.
The group’s return to profit was partly due to more than 22 billion income received from the sale of a business that was recorded as ‘extraordinary income’ in this year’s accounts.
Olympus forecasts a near tripling of its overall profit (274% rise), a move that led to a 12% surge in its share price earlier this week.
Separately, Olympus said that it is implementing measures to strengthen its whistleblowing system in a move designed to improve corporate governance and avoid a repeat of the 2011 accounting scandal.
It will do this by ‘establishing and expanding contacts for whistle-blowing, such as by designating such contact outside of the company; and clarifying one’s obligation to blow the whistle if he/she notices any misconduct’