The majority of the workers affected will simply not get new contracts when their current job stints end in April. The loss of the extra workers and other steps will help Honda reign in costs and production by about 140,000 units total in 2009, down to 1.17 million vehicles, reports CNN.
Honda's decision isn't surprising given CEO Takeo Fukui's statements on the matter late last year. The company has even completely dropped its participation in Formula 1 due to cost issues. Trimming the fat from its corporate operations around the world is the logical next step.
Earlier in 2008, as fuel prices continued to rise even as car sales slowed, Honda had vowed to limit losses in U.S. jobs by increasing its production of fuel-efficient cars. Now that fuel prices have dropped, however, sales of those fuel-efficient cars have slowed as well. The combination has left Honda with no choice but to reduce both output and its workforce.
Even the bargain-priced new Insight Hybrid, revealed earlier this week at the 2009 Detroit Auto Show, can't be relied upon for a dramatic uptick in sales due to the prevailing market conditions. It won't be on sale in the U.S. until April, however, and with fuel prices possibly beginning to climb once again, Honda's fortunes could yet reverse.