Wednesday, 12 September 2012 20:09

Sharp drops employee salaries by 10%

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Sharp, the Japanese manufacturer of TV's and display panels for many companies, including Apple, will have to cut their employee salaries up to 10% in order to save $180 million this fiscal year. The Salary cutting will start next month and it will be twice as big as the previous cut that happened in April. Earlier this year they lowered their management salaries by 5%, and now other employees are being targeted. Sharp also intends to cut the prices of their union workers by 7%, increasing the cut from a previous 2%, currently they are in negotiations with labor unions about it.

The company stated “Business circumstances surrounding the Sharp group are growing even harsher, and improvement of financial strengths for recovery need to be secured". Sharp had to mortgage its key factories and building to get an emergency loan of $2 billion which dropped their credit rating to the lowest level ever. Now they are trying to pull out of this tough situation to stay operational. They are negotiating with Hon Hai, the parent company of Foxconn Electronics to provide investments to this Japanese giant, and save it from disaster. It is rumored that Hon Hai will get close to 10% of Sharp shares if they decide to help.
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If they manage to increase cuts on union worker salaries that could save them $180 million until March 2013, Sharp also has plans to cut overtime pay and business trips. So far expectations are very bad, and they will finish the current fiscal year with a $3 billion loss. The previous contract with Hon Hai has been canceled after Sharp's shares dropped dramatically, and they still haven’t agreed on the new one. Sharp will celebrate their huge milestone this week, 100 years since the company was founded, but what if this is their final celebration?

[Ed – This also might cause a few issues with Apple as Sharp will not have the manufacturing capacity to maintain the production that Apple demands from their partners. Apple has been working to shift primary production to LG and a few others, but we wonder if this will lead to a shortage initially which Apple can use to help bolster demand for the iPhone 4 XL, we mean iPhone 5.]

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Read 4781 times Last modified on Wednesday, 12 September 2012 20:26

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