Major Japanese steelmaker Nippon Steel Corp. will have its employees take furloughs through March next year due to slumping demand for steel products amid the spread of the novel coronavirus, it has been learned.
The firm's decision was prompted by the fact that production cuts at automakers, a key client industry for Nippon Steel, are expected to continue for a long time, according to sources. Such measures against a possibly prolonged economic downturn could spread to other industries in the future, observers said.
In April, Nippon Steel introduced a system to have about 30,000 employees take about two days off per month at all its workplaces in Japan.
The steelmaker said it will maintain employment, while introducing similar furloughs from July on. The system is expected to continue through March next year unless demand picks up rapidly, the sources said.
This is the first time for Nippon Steel to introduce furloughs over the course of a year since fiscal 2009, when demand fell after the financial crisis triggered by the collapse of Lehman Brothers in 2008.
Domestic crude steel production fell below 100 million tons in fiscal 2019. Production is expected to fall below 80 million tons in fiscal 2020 due to the spread of the virus.
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