Toshiba Axes 4,000 Staff In Post-Delisting Restructuring Operation

Toshiba, once one of Japan’s most famous industrial brands, has confirmed it will axe 4,000 jobs under its new owners.

The decision to axe 6 percent of the domestic workforce comes after Toshiba had in December 2023 delisted itself after 74 years on the Tokyo stock exchange, and transferred itself into private ownership, in order to end a long-running ownership and financial saga.

The $13 billion takeover of Toshiba was by a group of investors led by private equity firm Japan Industrial Partners(JIP). Other investors include financial services firm Orix, Japanese utility Chubu Electric Power and chipmaker Rohm.

Operational costs

The consortium’s efforts to engineer a turnaround at such a well established Japanese brand like Toshiba will be closely examined, as private equity outfits in the country are not held in high regard within Japan’s traditionally conservative business culture.

Buried within Toshiba’s ‘Revitalization Plan’ documentation came the admission that the firm is seeking to achieve an operating profit margin of 10 percent in three years, as well as a “drastic reduction of fixed costs” to “lower break-even point (become leaner and stronger).”

Toshiba also said it would relocate office functions from central Tokyo to Kawasaki.

The new owners said management is “to promote implementation of the medium-term business plan by holding town halls at all business bases. Not a one-way explanation forum, but a place to hear and absorb the voices of employees and reflect them in management.”

As part of its ‘Personnel Optimisation’ scheme, Toshiba plans to implement a “time-limited, group-wide Early Retirement Incentive Program and Outplacement Support program for individuals who meet specific criteria (up to 4,000 people).”

It said it would streamline personnel structure by reviewing duplicated operations, especially staff.

It would also reassign and reinforce necessary personnel from both inside and outside the Group to support growth businesses, and improve efficiency through business process reform and structural reform while minimising impacts on business operations.

Toshiba also stated it plans to cut overtime from 80 hours plus to zero, and implement flexible work styles including hybrid and remote working options.

Troubled past

Toshiba has been seeking a way forward after years of accounting and mismanagement scandals that began almost a decade ago, when Toshiba faced a financial scandal involving accounting malpractices. The scandal showed that Toshiba had overstated its profit by $1.59bn (£1.25bn) over a seven year period (since 2008).

Back in 2015, Toshiba faced a possible delisting – a crisis that resulted in foreign-based shareholders owning more than half of the company, including activist shareholders such as Elliott Management, Third Point and Farallon.

It resulted in the resignation of Toshiba’s then chief executive, and the scandal was Japan’s biggest since Olympus was found in 2011 to have covered up $1.7 billion (£1bn) in losses. It came at a time when the Japanese government had been introducing measures to improve corporate governance in the country.

Toshiba attempted many options to secure its future. For example it sold off assets such as medical devices, personal computers, consumer electronics and its US nuclear power unit, Westinghouse Electric, which declared bankruptcy in 2017.

In August 2021 Toshiba began talking with a number of private equity firms as it explored its future options, including plans to break itself up into three separate companies.

But leading Toshiba’s shareholders signalled their opposition to the breakup of the veteran Japanese conglomerate, which left the company without a clear way forward.

In April 2022 Toshiba said it would solicit deal offers, including a potential buyout.

In early June 2022 Toshiba said it had received eight buyout offers and two offers of capital alliances that would see it remain as a listed entity.

Later in June 2022, Toshiba shareholders approved the addition of two board members from large activist investors, which added momentum to potential buyout plans.

Toshiba also previously said it would consider the possibility of privatisation, although the company’s chief executive insisted the firm would study all options.

In November 2022 a consortium led by private equity firm Japan Industrial Partners (JIP) submitted a 2.2 trillion yen ($14 billion) offer for the Japanese conglomerate, subject to approval by Toshiba.

Then in September 2023, Toshiba announced that a $14 billion tender offer from Japan Industrial Partners (JIP) has been successful – paving the way for the embattled industrial conglomerate to go private.