Nissan to Promote Japan-Based Contract Workers to Full-Time

(Bloomberg) -- Nissan Motor Co. is moving to promote all contract workers in Japan to full-time positions as the automaker’s push to cut fixed costs gives it more room to invest in its talent pool.

About 700 contract employees at Nissan’s plants, R&D centers and head office in Yokohama will be made full-time employees on April 1, Azusa Momose, a spokeswoman for the company said, confirming an earlier Bloomberg News report. Nissan will also abolish its system of hiring contract workers.

The promotions, which will increase expenses, are a sign of Nissan’s confidence in its outlook as the carmaker makes progress in its push to cut 300 billion yen ($2.8 billion) in annual fixed costs. The cuts have afforded the company a greater ability to push to retain skilled personnel by bringing them on full-time, a person with knowledge of the matter said.

The hiring plan will “enable more efficient and effective business operations as well as improve individuals’ motivation and skills,” Momose said.

Nissan announced in May plans to reduce its annual fixed costs through measures such as closing production lines and slashing capacity by 20%. This came after the Japanese automaker posted a 671 billion yen net loss for the fiscal year ended March, its biggest in 20 years.

The company posted an operating loss of 4.8 billion yen for the July-September quarter, shrinking it significantly from the previous quarters’ loss of 154 billion yen.

Still, Nissan is forecasting a net loss of 615 billion yen for the current fiscal year ending March, and if the company’s performance fails to recover, the new batch of full-time employees may prove a drag. In Japan, full-time workers are legally much harder to dismiss than contract employees who can be let go after their contract periods end.

(Updates with comment from Nissan in the fourth paragraph.)