Chinese battery and automaker, BYD, plans to lay off 7,000 employees as its debts continue to build.
After cutting over 70% of its auto sales staff in August, BYD is reportedly planning a second round of lay offs in its information technology, new energy and home appliance divisions. The new re-adjustments to personnel structure will see the number of staff reduce from 17,000 to 10,000 across several departments in an effort to cut costs as profits and sales continue to fall.
BYD founder Wang Chuanfu has long been proud of BYD's 100,000 strong workforce, which includes a 10,000 member engineering team, but claims that the overall business size has impacted on its low-price sales model.
BYD, bought last year by American billionaire investor Warren Buffet, saw its share price drop by over 40% from 33 yuan ($5.2) to 19.3 yuan ($3) after the last round of lay offs and a company report remarks that the latest round, if implemented, will cause an even larger crisis for the company.
Biannual reports from the struggling company show that first half profits were down by by 10.8% year-on-year to 22.5 billion yuan ($3.5bn) as a result of tougher competition, high production costs and lower vehicle sales.
Mired in debt, the company owes 16 billion yuan ($2.5bn) and 15 billion yuan ($2.4bn) in short-term and long-term bonds and loans respectively, and has issued 6bn yuan ($939m) of corporate debt in an effort to find new avenues of income.
Industry analysts predict that now is a poor time to issue corporate debt as investors will be likely to ask for much higher returns on investments, which would eat significantly into future profit margins. In addition, BYD has been accused of deceiving investors by withholding information surrounding lay off plans and profitability before the company's initial public offering (IPO) in June.