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Omron Announces Global Job Cuts Amid Business Overhaul

The electronics firm aims for a $200 million cost reduction by 2026, adjusting focus away from the Chinese market
o 6645.TSE Mid and Small Cap 2000
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Electronics manufacturer Omron will cut 2,000 people globally, the first time in nearly two decades that it has had to trim its workforce as it tries to breathe new life into its factory automation equipment business — particularly in China. President Junta Tsujinaga said at a May 11 press conference that it has offered voluntary buyouts for employees in Japan. It also will take corrective action, both home and abroad, to hit its target of reducing fixed costs by 30 billion yen ($200 million) by March 2026.

For the fiscal year ending March, the company is estimating a 98-percent plunge in net profit and is revising its policy on focusing too much on China. Tsujinaga said that it will reduce its reliance on the Asian country and will target the US and Europe for growth. It also will spread out into new industries, such as food, daily necessities, and medical products, in an effort to defend its market share from Chinese rivals and improve profitability by pushing high-marginal products and areas.

The company recently bought medical big data firm JMDC and will combine its medical device data with healthcare information from the firm. That is key to growing a critical area for the company. It is also trying to promote preventive medical care, or “treatment outside hospitals through remote oversight,” Tsujinaga said. It plans to put a lid on product development expenses by focusing on products that earn quick market shares and are immediately profitable.

In addition to the changes to its product lineup and marketing, OMRON said it is scrapping its medium-term management plan in order to lay the groundwork for a new five-year plan.

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