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June 6, 2005 - Olympus had experienced a recent downgrade in its credit rating, a drop to fourth place in the worldwide camera market, and the cut of almost one third of its workforce. Now, the hard hit manufacturer has publicly announced that they will attempt to cut digital camera production costs by 30 percent in order to remain competitive.
According to Bloomberg.com, Olympus President Tsuyoshi Kikukawa announced earlier today that the cuts were to keep pace with an expected decline of 15 to 20 percent in overall camera prices this year. Previously, the Japanese camera manufacturer estimated prices of their cameras to fall by three percent this current fiscal year.
Olympus officials, according to Bloomberg, will apparently seek camera parts from other manufacturers in order to keep up the pace of production while keeping overall costs down. Plants in China may also see more domestic parts used for cameras that will be sold in the burgeoning Chinese market.
In May Olympus reduced their manpower costs by a 30 percent reduction of its workforce. Olympus announced that approximately 4,000 employees in their imaging division, primarily in plants in China, will see their jobs cut. Overall, the personnel cuts, as well as other internal moves, are expected to result in a $121 million cost savings by next year.
The series of moves by Olympus in recent weeks has not gone unnoticed by investors, including investment services company Standard and Poor’s who downgraded Olympus’ long-term credit rating from an "A-" to a "BBB+." S&P has four top bank-grade investment ratings, ranging from AAA, AA, A and BBB. The reduction of Olympus’ credit rating to BBB+ was due in part to what analysts called a "substantial decline" in profitability in the company’s imaging division.