TOKYO -- Mitsubishi Heavy Industries plans to reassign nearly 2,000 employees, or 3% of its total workforce, from its aircraft and shipbuilding businesses as the coronavirus hits demand, Nikkei has learned.
The large-scale relocation plan will be the company's first since 2009 when the Lehman Crisis caused earnings to fall.
The Japanese manufacturing giant is being pushed to rebalance its workforce and capacity issues to meet current demand. The company, which has factories that remain inactive due to the virus, intends to redeploy employees to departments with higher rates of operation.
There has been a steady decline in the country's smokestack industries as competitors rise in China, South Korea and other Asian nations. The pandemic has thrown Mitsubishi Heavy further out of balance.
The group, which has about 80,000 employees, has begun discussions with its labor union and plans to relocate about 3% of the workers by this fall.
The relocation will target employees mainly in the commercial aircraft division, which handles aircraft parts for Boeing, as well as its embattled commercial airliner, SpaceJet. Workers will be relocated from main factories like Nagoya Aerospace Systems Works and subsidiary Mitsubishi Aircraft Corporation, which develops the SpaceJet.
In addition to factory workers, the redeployment will involve administrative employees and designers.
Workers in the group's shipbuilding and auto parts divisions, which have been struggling to compete with their Chinese and South Korean counterparts, will also be considered for reassignments.
Mitsubishi Heavy receives a lot of orders from Boeing, including for aircraft wings and fuselages. However, COVID-19 has led to a significant drop in orders for aircraft parts. In May, the company temporarily furloughed workers at its Nagoya factory.
The group decided on the relocation plan as it expects a long-term slump in global aviation.
Its SpaceJet project, originally called the Mitsubishi Regional Jet, went into development in 2008. A decade later and the small jetliner has yet to receive certification for commercial use. Developer Mitsubishi Aircraft incurred 464 billion yen ($4.3 billion) in excess liabilities for the year ended March.
With the problem-plagued SpaceJet project and a downturn in its auto parts business, Mitsubishi Heavy recorded a 32 billion yen loss before income tax for fiscal 2019.
Its outlook remains bleak, as the group forecasts 0 yen in profit before income tax for fiscal 2020.
Mitsubishi Heavy Industries is not the only manufacturer that has been prompted to realign its workforce. Last month, IHI furloughed 30,000 employees. In addition, Nippon Steel has 30,000 workers on temporary leave and JFE Steel has about 16,000.