Foxconn founder tells Sharp staff layoffs needed to begin revival

Thu May 12, 2016 11:24am EDT
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By Makiko Yamazaki and J.R. Wu

TOKYO/TAIPEI (Reuters) - Foxconn founder Terry Gou said there would have to be layoffs at Sharp Corp to turn around the ailing Japanese company, but pledged that wages would rise and profit-sharing would again be the norm.

"Unfortunately, a close review of the company's operations makes it clear that the level of inefficiency throughout Sharp means that a turnaround ... can only take place if there is a reduction in costs, and that comes with a very regrettable need to reduce Sharp's workforce," Gou wrote in an open letter, seen by Reuters, to Sharp staff late on Thursday.

Sharp earlier reported its annual losses trebled from a year earlier.

Taiwan's Foxconn, the world's largest contract electronics manufacturer, has battled to seal a $3.5 billion deal to give it a two-thirds stake in Sharp as the Japanese display maker seeks a return to profit in the face of slowing smartphone sales.

The letter said staff cuts would be carried out "responsibly and sensitively," but didn't provide figures. A person familiar with the matter said cuts could total 3,000 in Japan, and more when Sharp's global operations are included.

Foxconn confirmed the letter was a personal note to all Sharp employees from Gou and Tai Jeng-wu, Foxconn's vice chairman and the newly-appointed CEO at Sharp.

Sharp named Tai on Thursday to succeed Kozo Takahashi, becoming the first outsider to lead a company that started out making belt buckles and mechanical pencils a century ago.

Tai's 30-year Foxconn career includes running its vast operations at Shenzhen in China. He also played a key role in the Sharp stake negotiations, people at Foxconn told Reuters.   Continued...

Sharp Corp Chief Executive Kozo Takahashi (R) speaks to the media after a company results news conference in Tokyo, Japan, May 12, 2016. REUTERS/Toru Hanai