Big Restructuring Shocks in Japan: Crisis Mode or Course Correction?
Nissan and Panasonic are cutting tens of thousands of jobs. Behind the headlines lies a deeper story of overdue transformation.
Panasonic is cutting 10,000 jobs.
Nissan is shutting down seven factories and slashing global output by one million cars.
Headlines like these are turning heads — and raising questions.
Several clients asked me this week:
“Is Japan falling back into crisis mode?”
My answer: Yes — and no.
Let me explain.
What’s the Bigger Picture?
These headlines are dramatic — but not surprising.
For years, some of Japan’s industrial giants have delayed hard decisions.
Instead of confronting underperforming units, doubling down on innovation, and focusing on profitability, they clung to legacy products and sprawling portfolios — until now.
The recent cuts? They’re not so much inflicted by Trump’s tariffs and uncertainty in the global economy. They’re long-overdue restructurings that have finally become unavoidable.
Let’s be clear:
🛑 This is not an industry-wide meltdown.
✅ This is about specific companies that lost their edge.
Companies that:
bet on the wrong technologies and product lineup
held onto overcapacities and unprofitable business units for too long
and lacked the courage to reinvent themselves in time.
Think of it as a reality check, not a sudden collapse.
🔹 Panasonic’s Black Ink Restructuring
Earlier this year, Panasonic announced it would restructure its home appliance division and finally stop manufacturing TV sets. Now, that’s just the tip of the iceberg.
The company announced this week it will lay off 10,000 employees — roughly 5% of its global workforce — split evenly between Japan and overseas. Cost of the overhaul? Nearly $900 million in restructuring charges.
What makes Panasonic’s restructuring significant is that it isn’t a reaction to losses.
Panasonic is profitable. In Fiscal Year 2025 (ended 31 March 2025), the company posted over ¥360 billion in net income and an operating profit of ¥426.5 billion. And yet, it plans to follow through with one of its most drastic restructuring programs.
Panasonic CEO Yuki Kusumi made it clear: the issue isn’t today’s balance sheet. It’s the company’s structural stagnation. For over 10 years, Panasonic has failed to generate sustained growth.
In Friday’s earnings conference, Kusumi admitted.
“Employees can’t take pride in a company that doesn’t grow.”
His goal? A 10% return on equity by FY2028. Achieving that means slashing fixed costs, exiting legacy businesses, and focusing the group on what drives value.
Japanese media call this a black ink restructuring — proactive reform not prompted by red ink, but by years of underperformance and increasing investor pressure.
And it’s not uncommon.
From Ricoh and Omron to Shiseido and Sony’s gaming division, Japanese firms have in recent years shedded non-core assets and launched early retirement programs — even while reporting solid profits.
Panasonic is still a vast conglomerate with more than 200,000 employees and a history of cautious, incremental reform.
But this time feels different.
This isn’t just cost-cutting. It’s a reckoning with businesses that no longer deliver results.
It’s about:
Shutting down loss-making operations
Streamlining bloated back-office functions
Doubling down on what works: energy storage, EV batteries, and B2B tech solutions
Panasonic’s battery unit — the one supplying Tesla — remains one of its few true growth engines. It missed last year’s forecast but is expected to grow operating profit by 39% this year. It’s now central to the company’s future strategy.
🔹Restructuring Nissan — Again
This week, another Japanese giant had to hit the reset button — but for very different reasons.
While Panasonic is restructuring from a relative position of strength, Nissan is doing so out of necessity.
The company just announced one of the most sweeping overhauls in its history: it will shut seven factories and cut 20,000 jobs, or about 15% of its global workforce, after posting a ¥671 billion ($4.5 billion) net loss — its worst result in over two decades.
For many, the situation brings back memories of the late 1990s, when Nissan faced a similar crisis and Renault came to the rescue.
Back then, it was Carlos Ghosn who led the turnaround with his bold Nissan Revival Plan — closing plants, cutting jobs, and breaking long-standing supplier ties. The plan shocked corporate Japan but returned the company to profitability in just one year.
Today’s situation is different, but the urgency is familiar.
Now it’s Ivan Espinosa, Nissan’s newly appointed CEO, who is tasked with leading the rebuild — without the same political cover or turnaround legend backing him.
Here’s what his plan includes:
Factory closures: From 17 to 10 global sites by FY2027
Workforce reduction: 11,000 new job cuts added to the 9,000 announced last year
Cost savings: Targeting ¥500 billion in structural cuts
Production scale-back: Annual capacity to fall by one million cars from 3.5M to 2.5M vehicles
R&D rationalization and shift to “competitive locations”
Espinosa has wasted no time showing a different tone from his predecessor Makoto Uchida. While Uchida hesitated to shutter plants, Espinosa made it clear: volume is out, profitability is in.
In this week’s press conference, Espinosa acknowledged:
“Nissan must prioritize self-improvement with greater urgency and speed.”
This dramatic step comes after a failed attempt at a merger with Honda and waning performance in key markets like the US and China. Nissan’s model lineup has aged, its EV ambitions lag behind competitors, and the brand’s value has eroded significantly since the days of Ghosn.
Adding to the pressure, Nissan now faces tariff headwinds in the US, with a forecasted ¥450 billion hit due to import duties on cars and parts — affecting nearly half of its US exports, mostly from Mexico and Japan.
Meanwhile, talks of a new partner loom in the background. Taiwan’s Foxconn has approached Nissan, looking to expand its EV assembly business with Japanese partners. For now, Nissan says it remains open to partnerships — but Espinosa’s focus is on internal reform before external rescue.
What’s Needed: Choose and Focus
If there’s a common thread between Panasonic’s overhaul and Nissan’s crisis-driven reset, it’s this:
Japanese manufacturers are being pushed to do what they’ve long delayed — make hard choices about where to compete and where to withdraw.
For years, the phrase “choose and focus” (sentaku to shūchū) has featured prominently in boardroom presentations and mid-term strategies. But only a few companies truly followed through.
Hitachi stands out as a case in point.
It began restructuring early, sold off non-core assets, and concentrated its efforts on IT, energy, and digital infrastructure. The result? A leaner, more global business that’s become a benchmark for international peers like Siemens and GE.
I’ll break down Hitachi’s playbook for reinvigorating its business in an upcoming post.
Talk soon.
Pascal