Related topics

Core of ‘Nissan Town’ to Close

March 8, 1995

ZAMA, Japan (AP) _ For more than three decades, this city was known as ``Nissan Town.″ Its sprawling auto-assembly plant was a point of pride and a symbol of Japan’s postwar economic miracle.

But at the end of March, Nissan Motor Co., Japan’s second-largest automaker, will close the core section of its factory here _ the first such shutdown by a Japanese automaker since World War II.

The closing epitomizes the woes of Japan, struggling to pull out of its worst post-war slump.

Big export companies like Nissan _ the powerful engines that drive the world’s second largest economy _ are in a double bind these days.

At home, the recession has dampened demand, sending domestic profits down. Overseas, the strength of the yen makes Japanese products even more expensive, cutting deeply into earnings.

This week, the yen has soared to new heights against the dollar, reaching its highest levels since the modern exchange-rate system was established half a century ago. In the last three weeks alone, the Japanese currency has risen nearly 10 percent against the dollar.

In Zama, a city of 100,000 people 50 miles west of Tokyo, the pain is palpable.

Nissan was once Zama’s lifeblood. In 1992, it accounted for nearly one-fifth of the city’s tax base, said city official Yoshinori Kato. That has already fallen off sharply as operations have dried up.

Some Nissan branches at Zama will still operate: model design, research, and machinery and auto-parts production. But the assembly plant, which has churned out 10 million cars since 1964 _ will be idled on March 31.

The company says the Zama shutdown is part of a long-term modernization strategy that will ultimately strengthen Nissan.

The ripples are already spreading beyond the 2,000 autoworkers immediately affected. For Toshimasa Magaki, who owns a 10-room inn near a railroad station, earnings have been halved since Nissan announced closing plans two years ago.

``This is the worst slump in my business in the past three decades,″ he said.

Mikio Sekiguchi, a taxi driver, said he and his colleagues are already seeing a 10 percent to 15 percent dropoff in monthly income, and expect worse. On a recent afternoon, the plaza outside the assembly plant was all but deserted.

Nissan officials said as of the end of February, nearly 1,000 Zama workers had been transferred to various Nissan facilities.

Before the nation’s economy began slowing down five years ago, Japan’s automakers plowed profits back into capital investments. But with demand declining and costs climbing, the companies are now under heavy repayment burdens.

Nissan has already embarked on a dramatic cost-cutting drive, and on Monday it said it would aggressively continue that program over the next three years.

News reports said a new plan called for trimming 7,000 jobs from its 49,000-member workforce through attrition and reduced hiring.

Despite streamlining, the red ink is mounting. In fiscal 1993, Nissan’s net losses worsened to $966 million from $622 million the previous year. Its sales dropped to $64 billion in fiscal 1993, down from $69 billion a year earlier.

Like other companies, Nissan is seeking to move more and more production outside Japan. In 1994, its overseas plants produced 1,059,172 units, up 5.2 percent over the previous year _ and an all-time high.

Update hourly