Sony axes 16,000 jobs and shuts down plants

Since taking over as the president of Sony three years ago, say his close colleagues, an increasingly frustrated Sir Howard Stringer mentally segregates his staff between those who “get it” and those who do not.

Those in the latter camp probably assume that a headline downsizing of 16,000 permanent and part-time workers from Sony means the worst of the job cuts is over. They still don’t get it. Come late January, that figure may feel pretty trifling relative to the full restructuring package Sir Howard has surely been building towards since 2005.

Although today’s thinly-detailed “initiatives to improve profitability” may have resembled a particularly ferocious bit of cost-slashing for the downturn, they were anything but. This was the convenient exploitation of a following wind — a nasty, destructive hurricane that is genuinely rattling Sony’s business to the core, but which also provides the excuse its first non-Japanese president has needed to jerk the company out of its stupor.

And that stupor has cost dearly: it may even now be too late to truly “save” the Sony most people think of as Sony. Sir Howard may have shaken up the company with his bid to break down “silo walls” and by ditching divisions that sat uncomfortably on the books, but the past couple of years have been softened considerably by the bull market.

Claims must surely have been made from within Sony’s worst-performing divisions to which Sir Howard felt compelled, until now, to give the benefit of the doubt. Those divisions have not, as far as the outside world can tell, supplied the board with the innovation or the genius or the pizzazz promised when they were allowed to live. The consumer spending crisis has now called their bluff.

Any stray whining from the Tokyo end of the business has, until now, been kept to a minimum by skewing cuts towards overseas divisions but, even then, there is the sense that the Welshman has never operated without the cloying whiff of mutiny. According to insider gossip at the company, when the financial crisis began to scream earlier this summer, Sony Pictures, unbidden, presented the board with a series of cost-cutting suggestions. The bigger, flabbier electronics division supposedly came up with nothing. It has not been made explicit yet but the next round of cuts will surely sink the knife deep into Sony’s domestic operations.

Sir Howard’s problems with Sony arise from a variety of boils, which, despite valiant attempts, he has never been able to lance. Whatever emerges in January may turn out to be the Welshman’s definitive strike against the “don’t get its.”

It is that or accept defeat. Because when he talks about the “get its” and the “don’t get its” within the company, this is not some trivial disagreement over whether the standby light on the PS3 should be blue or red, but a fearsome clash of culture and philosophy. It is the fantasy of halcyon days Sony versus 21st century reality; it is globalisation versus insularity; it is shareholder interests versus “the Japanese way”; it is, ultimately, change versus stagnation.

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