Hitachi Massively Restructures Operations

Japanese conglomerate Hitachi (News - Alert) has announced that they are radically reorganizing the company.

After posting record losses three years ago, the company has recovered, with its shares up seven percent as its competitors continue to struggle.

The move is an attempt to shed some of its unprofitable businesses and focus on its strengths. Hitachi currently has 900 divisions and employs a total of around 360,000 people around the world.

Among the unprofitable businesses Hitachi has sold, its hard drive manufacturing arm was one of them. It was sold to Western Digital last year for $4.3 billion.

"In an environment with a strong yen and a lot of competition from other Asian companies, restructuring is important and you can see that all the techs are seriously taking this on now… In an environment with a strong yen and a lot of competition from other Asian companies, restructuring is important and you can see that all the techs are seriously taking this on now," Hajime Nakajima, a sales trader at Cosmo Securities, said to Reuters (News - Alert).

Hitachi’s operations include consumer electronics, power generation, industrial applications, and construction machinery, among others.

The company plans to consolidate its rail systems, urban planning, and defense operations under one company.

Hitachi also has plans to open up a new management position in Beijing. The firm is seeking to expand its market in China, which currently accounts for 13 percent of the company’s revenue. Hitachi also intends to expand in the rest of Asia and seek other emerging markets as well.

Hitachi Data Systems (News - Alert) is also pairing with Exterro to provide e-discovery and information governance technologies.

High cost structures have been an obstacle to Hitachi’s recovery. The company’s biggest losses were to the tune of 787 billion yen ($10.33 billion) in 2009.

Hitachi continues to grapple with the previously mentioned strong yen, turmoil in global economic markets, and the aftermath of last year’s major earthquake in Japan. Even though the firm reported a 21 percent fall in quarterly profit, they still maintain their yearly outlook of a 400 billion yen ($5.25 billion) profit this year.

The move comes at a time when other major Japanese conglomerates are reorganizing themselves. Panasonic (News - Alert) is getting rid of 17,000 jobs, and Sony has announced a new chief operating officer.

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