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October 25, 2012

Sony Plans to Shut Operations in Tokyo Tech Center to Cut Costs

By Shankar Pandiath, TMCnet Contributor

Sony Corp, has decided to trim costs by shutting its operations in its Tokyo office. About eight percent of Sony’s staff based in Japan was housed in that particular Tokyo office building. This move of Sony’s is being seen by analysts as the first concrete move by the electronics and entertainment giant to trim its expenses. In a way this move paves way for the pending 4,000 job cuts.

Sony will thus shut down its 31 storey building ‘Shinagawa Technology Center’. Sony was the occupant of the building ever since it was built in 1998. About 4,800 staff members who worked in the Sony office will be relocated to another office. Sony expects to cut costs by shifting the staff to a lower-cost facility, similar to its campus in suburban Atsugi. The expected amount that it aims to save by relocation is not disclosed yet. Its quarterly earnings will be announced on November 1st 2012.

Image via Shutterstock

The Shinagawa Technology Center was located very close to Sony's headquarters. It is owned by Sumitomo Life Insurance Co, Nippon Steel Kowa Real Estate, and Obayashi Corp.

This decision is a part of still unfolding restructuring that the company is going through under Chief Executive Kazuo Hirai. The move to shut operations in the Tokyo office had not been disclosed earlier. The move is intended to cut costs so that Sony can realign its business and slowly retreat from TV manufacturing business where it was incurring losses.

The relocation is expected to be completed by September. Sony will go ahead with its plan of reducing workforce. It aims to cut about 10,000 jobs globally by March 31st including about 4000 jobs from Japan. Sony will be offering an early retirement program to its employees at the headquarters and will be cutting its headquarters staff by a fifth.

Further restructuring of Sony includes the closure of a factory which makes lenses for cameras and mobile phones. It is located in Gifu, Japan. Sony has already completed the sale of its chemical business in September. That sale resulted in moving about 1,800 of its workers from its payroll. The business was bought by a State-run Bank.

The move should be a significant cost saving for Sony, said Fred Takahashi, executive director at CBRE Japan, a real-estate services provider.

Hirai has a new vision for Sony. He plans to revive Sony by venturing into new businesses. He wants Sony to focus on gaming, digital imaging and mobile devices. The company is going through a turbulent time. Since Hirai came on board and took the helm, Sony’s stock is down 43 percent.

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