Japan's Prima Meat Packers Ltd said on Tuesday it would slash its workforce by about 30 per cent by March 2005 to help it weather damage from price falls and the outbreak of mad cow disease in Japan.
Japan's third-largest meat processor said it planned to cut about 700 employees from its workforce of 2,174. That would help it shave an estimated 6.6 billion yen ($53.20 million) from personnel costs over the next three years, it said.
Most of the job cuts would come through the expansion of an early retirement plan, voluntary retirements and natural attrition.
"The environment our company is in has taken a sudden turn for the worse," Prima Meat said in a statement.
"So more radical restructuring methods in addition to our new mid-term business plan are now needed."
Japanese consumers have ignored government assurances that Japanese beef is safe for consumption, fleeing instead to foreign beef and other types of meat after two cows were confirmed to be infected with mad cow disease.
With the double blow of falling meat prices and demand, Prima Meat forecast sales to drop three percent to 273 billion yen in the 2001/02 business year to March. Net loss is forecast at 13 billion yen for the year, compared with a loss of 7.88 billion yen a year earlier.
For the first half ended September 30, Prima Meat posted a group net loss of 6.07 billion yen on sales of 142.33 billion yen, up 2.9 percent year-on-year.
Prima Meat said the job cuts would result in a special loss of around 3.7 billion yen in the next three years to March 2005. It plans to book 3.0 billion yen of that in the current year through next March.
The meat packer also said it would close one domestic plant, spin off another plant as a separate company, and step up its overseas production operations.
Earlier this month, Japan's largest meat supplier, Nippon Meat Packers Inc, cut its full-year net profit forecast by five per cent, forecasting a rapid slowdown in sales.
Shares in Prima Meat ended Tuesday trade up two yen or 2.5 per cent at 82 yen, compared with a 1.04 per cent drop in the Nikkei 225 share average.
The shares have fallen more than 17 per cent since the first mad cow case was discovered on September 10, compared with a 4.1 per cent rise in the Nikkei over the same period. ($1=124.04 Yen)