Japan’s Tokyo Rope MFG. offering voluntary buyout program in China
TOKYO, NNA - Japanese cable maker Tokyo Rope MFG. Co. has offered a voluntary buyout program at its Chinese manufacturing unit as the new coronavirus outbreak is hurting demand and suspending production of its products used for the automotive and energy sectors.
All of about 200 employees at Tokyo Rope (Changzhou) Co. in the eastern coastal province of Jiangsu, a subsidiary of Tokyo Rope MFG., can apply for this retirement program, which started on Monday for about a week, a spokesman at the parent company told NNA.
The company sets no target for the number of employees applying for the program and will be discussing details with applicants about severance pay under Chinese law, he added.
After the Lunar New Year Holidays in late January, the subsidiary halted production of its steel cords for automotive tires and wires to cut silicon ingot for solar panels, from Jan. 31 through Feb. 18. It had suspended production again since April 28.
There are “no prospects” of receiving enough orders to resume stable operation, the spokesman said, adding the company has no option except to offer the voluntary retirement program.
The impact of the Covid-19 epidemic has worsened the company’s business, which already had been hit by sluggish demand from the automotive industry in China and Southeast Asia and from the energy sector facing a Chinese government policy of curbing the introduction of solar energy.
Tokyo Rope Changzhou has an annual production capacity of 18,000 tons of tire cords and 1,000 tons of ingot-cutting wires. About 40 percent of those products were sold in China and the remaining 60 percent were shipped to Southeast Asia.
The Tokyo-based firm has no similar retirement plans for its two units in Jiangsu producing cables for bridges and its operations in Vietnam to manufacture wires for elevators.
The company said it will delay the announcement of its earnings for the fiscal year through March 31 to May 18 from the initially scheduled on May 11, having been hit by the epidemic that has forced its employees to work from home.
In February, it cut its net profit forecast for that fiscal year to 200 million yen ($1.87 million) from earlier estimated 1.5 billion yen due partly to weak demand for the steel cords and the wires.