Photograph — Competition

This week, Uber disclosed that it is cutting 400 jobs from its marketing team of over 1,200. According to the company, the internal restructuring is in line with the aim of making its brand message more consistent, improving efficiency and above all, reducing costs. Its first earnings report as a publicly-traded company showed that Uber had a loss of $1 billion against a revenue of $3.1 billion in the first quarter of this year.

While the first two reasons given for the layoff are peculiar to the ride-hailing giant, the latter objective of cutting costs is a goal shared by many international corporations and has resulted in a wave of mass layoffs this year. 

Just over a week ago reports surfaced of imminent massive job cuts by Nissan.  The rumors were later confirmed by the Japanese automobile manufacturer that it was cutting a whopping 12,500 jobs around the globe (nine percent of its workforce). It also plans to reduce production capacity as well as the size of its line-up by 10 percent each by the end of the 2022 financial year.

Nissan, which employs around 139,000 people, is in the midst of a ‘five-alarm’ crisis at the moment. At the core of the automaker’s crisis is its volume first strategy which was employed for much of the past decade under former Chairman, Carlos Ghosn. The strategy which worked well in the face of a demand boom during the economic recovery has in the past two years led to high operating costs, excess production capacity, and low per-unit profits.

In addition, Nissan has a much lower operating profit margin than its competitors. In 2018, Toyota’s operating profit margin was over 8 percent, while Nissan’s stood at 4 percent. Halfway through 2019, the margin has slid further to 0.1 percent, according to the recent quarterly results. In a matter of just three months, the car maker’s crisis appears to have accelerated wildly, leading to the huge layoff.

Fellow automobile maker, Ford Motor, told employees in May of a plan to cut roughly 10 percent of its global salaried staff by August as part of a companywide “redesign” which will eliminate 7,000 white-collar jobs and save the company about $600 million a year. As reported by the Detroit News, the layoff is part of the American car maker’s goal of cutting $25.5 billion in operating costs over the next few years. This is coupled with the $11 billion re-design, which includes the salaried workforce cutbacks.

Over in Africa, leading entertainment company, Multichoice Group, announced a restructuring of its business about a month ago. The move was seen as a response to changing trends in the market and involved the shedding of over 2,000 jobs at its call centers and walk-in services over a two-month period.

South Africa-based MultiChoice, which competes with Netflix in online streaming via Showmax, has over the past three years seen a steady decline in the number of customer telephone calls and e-mails into its call centers and walk-ins to its customer service centers. In contrast, self-service digital channels have continued to grow, now accounting for 70 percent of all its customer service contacts. In line with changing customer behavior, the ideal action was to reduce the workforce, ultimately avoiding unnecessary operational costs.

Among other notable cost-inspired mass layoffs this year, particularly in the global financial space, are 18,000 job cuts globally by Germany’s Deutsche Bank (one of the biggest overhauls to an investment bank since the aftermath of the 2008/2009 financial crisis). Also, New York-based Citigroup plans to cut hundreds of jobs in its trading division amid an industrywide slump in revenue this year.

Meanwhile, international financial services behemoth, HSBC, is laying off of up to 500 jobs from its global banking and markets business; and the CEO of Nordea Bank, the largest financial services group in the Nordic countries, recently hinted at more job cuts by saying redundancies need to continue if the lender is to achieve its goals. This comes less than two years after announcing 6,000 layoffs.

Elsewhere on Ventures

Triangle arrow