TDK Corp., the largest manufacturer of magnetic heads for disk drives and a producer of organic light-emitting diode displays used in many mobile phones, is set to cut about 11,000 jobs, which amounts to approximately 12 percent of its workforce.
The Tokyo-based company issued a statement on October 31 saying that its net income had dropped to 6.7 billion yen, or $86 million, in the April-Sept. period. This same time a year ago, the company made a profit of $26.1 billion yen.
Further, the company stated that it would sell unused assets worldwide and reduce fixed costs to keep itself in business.
Adding to TDK’s problems are Thailand’s floods, the most severe since 1942, which has forced the company to halt production and temporarily close some power plants in the country.
The company announced restructuring plans that will begin as soon as this fiscal period. The yen has reached a postwar high in value, the statement said, which has eroded its profits and caused TDK to see a major hit in profit this year, the statement said.
The company had forecasted about $50 billion in profit for this fiscal year, the statement said. But because of the stronger yen and the Thailand floods, profit will probably amount to about $20 billion, the company said.
While TDK has not stated any intention to increase the cost of its products, some Americans have shown concern.
“Smartphone prices may go up,” junior English and journalism major Emily Thompson said. “If they can’t afford to staff so many people, they may be forced to charge more for smartphones to make up the difference.”
The news is not welcomed by the struggling American and worldwide economy. TDK, according to Bloomberg Businessweek, has 88,449 employees all over the world.
While Americans struggle to find jobs opportunities in a tough economy, TDK’s financial straits demonstrate that the job market is weak elsewhere in the world as well.
“Although here at home we worry so much about the American economy,” junior government and politics and journalism major Chris Leyden said, “this is a prime example of how the entire world economy is struggling right now.”