SAN JOSE, Calif. - Loss-ridden Renesas Electronics Corp. has lowered its forecast and announced an early retirement program for its employees in Japan.
While no upper limit or target has been placed on the number of applicants, Japan's Renesas Electronics (Tokyo) anticipates the program will reduce its workforce by approximately 1,200 people. The cost of the program will be charged to the earnings in the fiscal year ending March 31, 2011.
The company expects to record a total special loss of approximately 77.0 billion yen ($942.5 million) in the fiscal year ending March 2011.
Renesas Electronics began on April 1, 2010, after the merger of NEC Electronics Corporation and Renesas Technology Corp. Since then, Renesas Electronics has implemented its “100-day Project” by reviewing all of the former companies' respective management resources.
The company is looking to become profitable after years of losses. For the quarter, Renesas posted sales of 295.4 billion yen ($3.6 billion) and a loss of 8.2 billion yen ($100.3 million).
Renesas Electronics announced its consolidated first half results. Consolidated net sales for the six months ended Sept. 30, 2010 totaled 587.5 billion yen ($7.2 billion). Net loss totaled 41.2 billion yen ($504.2 million).
As for the forecasts for the fiscal year ending March 31, 2011, net sales are expected to be 1.17 trillion yen ($14.3 billion), 20.0 billion yen down from the previous forecast announced on July 29, 2010. Net loss is expected to be 80.0 billion yen ($981.6 million).
As a result, Renesas must cut costs. This week, as part of the plan, Renesas decided to spinoff its mobile chip unit into a new and consolidated subsidiary, Renesas Mobile Corp., effective Dec. 1, 2010.
Renesas dismissed the assertion that the spinoff is aimed to cut costs. ''This is incorrect. We have established Renesas Mobile as part of our growing startegy, not for cost reduction,'' according to an official from Renesas.
Also as part of the plan, Renesas in July said it plans to cut nearly 10 percent of its workforce, or about 4,000 jobs, by year's end. The early retirment program is part of the layoffs.
It is also moving towards a fab-lite strategy. It will use foundries for devices at 28-nm and below. And it will no longer invest in new fabs. In terms of R&D, Renesas is also becoming part of IBM Corp.'s ''fab club.''
Renesas plans to use outside foundries--such as GlobalFoundries Inc. and TSMC--on all of its 28-nm and smaller geometry semiconductor products. In line with this change, the company has positioned the 300-mm wafer lines at Naka plant and Renesas Electronics Yamagata Semiconductor’s Tsuruoka plant as manufacturing facilities for the company’s basic products, especially for systems-on-chips (SoCs) up to 40-nm.
The company will continue its research and development (R&D) of advanced processes by unifying existing development structures. It will continue to work with NEC's R&D partner, IBM Corp., for process technology. It appears that it will no longer work with Renesas' original R&D partner, Panasonic.
I like your idea of "a transparent assessment of how essential a particular job role" is.
All in all, IMHO, the problems resolves around a greedy few. That's based on my experience and doesn't apply to all companies, by the way.
Also redundancy in a merger (as another reader points out) should not equate to a pink slip. Loyal employees should be retrained when possible, not let go.
This is not pleasant and some people suffer of course (I was laid off once in my life so have some first hand experience)...but these are the rules of the capitalist economy! I think it is irrational to expect that corporation will behave differently...all we should be talking about is how to change the rules for corporation so they don't benefit from such actions...Kris
Something I've seen is that companies will find an excuse for getting rid of an older person, and then turn around and hire a recent college graduate to the same job, presumably at a lower wage. However, it tends to be a "you get what you pay for" proposition. The new guy can take a year or two to get up to an acceptable level of productivity. What you could have done instead was have pay cuts to keep the experienced guy around, and then reward him with pay increases when the economy improves. The hideousness of how people get treated at times is beyond offensive. In our current economy, it is amazing to me that the experienced guys aren't given a shot at the entry level jobs. I'm sure they would take those jobs, and be happy to have th em. It's also very offensive, not to mention insulting, that H1-B keeps chugging along when there are American workers who are desperate for work who are more than capable of doing the work. So much for my soap box.
One thing is that when two companies merge there is inherent redundancy. Does Renesas Electronics need two HR groups? Two finance groups etc.? Many of these people should be expecting a pink slip in this type of merger.
Early retirement plans or Voluntary retirement plans, these come in different names. But they all mean the same thing in that few engineers have to walk out whether they like it or not.
Being over-ambitious in the boom years and being over-pessimistic in the gloom years has been the hall mark of companies over the years. Laying off and involuntarily being made to take part in early retirement plans, unfortunately, have been happening frequently in the last two years or so. As engineers, being one of the hardest hit groups in these retirement plans, may be we should look into what prompts these in the first place.
I am wondering, whether there ought to be some sort of open discussion about the ‘real-need’ for a particular job role at the recruitment stage. Say, what happens is, you are offered a job which includes so and so many roles, the prospective employee is naturally glad and does not inquire whether he/she is really needed within the organization. In my opinion, a transparent assessment on how essential a particular job role for the organization as a whole should be laid down clearly at the outset of a employer-employee relationship.
In the boom years of the early 2000s, companies have virtually stocked people unnecessarily. May be a half-a-dozen people to do a job-role that a single person can fill in. May be Renesas is among them. May be that is the reason why 1200 people have to voluntarily accept the early retirement plan. Engineers, what do you think?
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