As Nissan North America continues to stumble, its chairman is taking steps to cut costs across the company, slashing employee travel expenses and putting the entire U.S. organization on two days of unpaid furlough next month.
“While we’ve made some positive progress, Nissan’s performance has fallen short of our expectations,” Nissan North America Chairman Jose Valls said in a memo to employees this week and obtained by Automotive News.
Valls said in the memo that Nissan will cut employee travel expenses by 50 percent “effective immediately.”
The company also will remain closed for two days after the New Year’s holiday, with all U.S. employees foregoing pay for Jan. 2 and Jan. 3.
Valls informed Nissan employees that the move will translate to a 9.2 percent pay cut in January for those paid monthly. Employees paid bi-weekly will not be paid for those two days.
The mandatory closure will affect all of Nissan’s U.S., operations, including the automaker’s headquarters in suburban Nashville, and assembly plants in Smyrna and Decherd, Tenn., and Canton, Miss. Luxury unit Infiniti and the company’s finance arm Nissan Motors Acceptance Corp., are included in the cost cutting.
Nissan also operates a large engineering center in Farmington Hills, Mich., a design studio in San Diego, and various other offices around the country.
“I realize this news may be unsettling and that it will affect your personal lives and families,” Valls said in the memo.
A Nissan spokesman declined to comment.
Nissan North America’s U.S. sales fell 16 percent in November from a year earlier, with Nissan Division sales dropping 13 percent to 83,562 vehicles, and Infiniti diving 33 percent to 9,385. Through November this year Nissan North America’s U.S. sales are down 7.8 percent, with the Nissan Division down 6.5 percent and Infiniti off by 19 percent.
The automaker is slogging through a painful pivot away from years of high-volume fleet sales and a heavy reliance on retail incentives.
But the cost-cutting measures also foreshadow a potential industry downturn. New-vehicle sales are expected to come in nearly 3 percent lower for 2019, based on an average of industry forecasts.
Nissan already has been trimming its sails in North America. Earlier this year, the automaker offered buyouts to hundreds of salaried employees in the United States and announced plans for 700 job cuts at its assembly plant in Canton, Miss. Last December, it also eliminated 1,000 jobs at two factories in Mexico.
“We have taken a number of measures this fiscal year to try to fix the fundamentals and right-size the business to improve our results,” Valls said in the memo.
The measures are being announced close on the heels of the Dec. 1 start of Nissan’s new global CEO, Makoto Uchida. In his first statements as CEO this week in Yokohama, Uchida said that fixing the U.S. market for Nissan is his first priority.
Nissan has undergone a year of leadership upheaval following the Nov. 2018 arrest in Tokyo of the automaker’s influential chairman, Carlos Ghosn, on charges of financial improprieties.
Valls was named chairman of the company’s North American business unit in March of this year.