Murata to Lay-Off 3,000 Temporary Workers In Japan

Move Designed To Combat The Strong Yen

According to a story in Bloomberg Business News, Murata Manufacturing Company Limited, the world’s largest capacitor manufacturer, will eliminate the majority of its temporary workforce and increase production of capacitors and related components overseas as the rising strength of the Japanese yen forces the company to reduce costs.  (Japan this month intervened for the first time since 2004 to weaken the yen after it rose to a 15-year high against the U.S. dollar.)

Murata plans to cut its temporary workforce by 67%, from 4,500 to 1,500 and will move some factory equipment overseas to reach its previously announced goal of achieving a 30 percent overseas production ratio by March 2012.

In Japan, temporary employees are workers sent by agencies to fill positions and don’t have the same rights as regular company employees. The cuts would bring the number of domestic temporary  workers back to the same level as Murata said there was “no choice” but to move the company’s automated production machines to plants in China and Thailand, where operating and personnel costs are lower.

The company manufactures about 15 percent of its products overseas and will begin production at a new Chinese plant for capacitors in Wuxi, Jiangsu Province, from April 2011.

Murata in July reported net income of 15.5 billion yen ($185 million USD) for the three months ended June 30, compared with a loss of 3.67 billion yen a year earlier, as sales surged 31 percent. It raised its profit forecast for the year ending March by 18 percent to 52 billion yen.