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Yamaha Seeks to Trim Staff at Buena Park Headquarters

February 24, 1989|LESLIE BERKMAN | Times Staff Writer

Yamaha Corp. of America, the nation's largest musical instruments maker, has taken steps to prune the sales and administrative staff at its Buena Park headquarters in an effort to improve waning profitability.

The company, which also makes sporting and electronic goods, is offering all 400 full-time employees in the music instrument unit in Buena Park a one-time opportunity to voluntarily resign to qualify for a special benefits package that can include extended medical and insurance benefits and up to 10 months' severance pay.

The headquarters employees have until March 3 to decide whether to resign, after which Yamaha may implement an outright layoff for the first time in its 29-year history, said Masahiko Arimoto, president of Yamaha of America.

He declined to say how many workers he ultimately plans to cut from the staff "because I don't want to influence the decision of the employees."

However, Thomas Beckmen, president of Roland Corp., a major competitor in Los Angeles County, said Thursday that he has interviewed some Yamaha personnel who said a 30% to 35% cutback is planned.

In an open letter to employees Jan. 26, Arimoto said "the degree to which the voluntary separation program is successful in reducing the size of the headquarters and field staff will dictate to what extent additional reductions through involuntary separation will be required."

The 50 headquarters employees in the sporting and electronics goods units are not affected, company officials said, nor are about 600 manufacturing and sales employees at other locations in the United States.

Besides the staff cuts in the musical instruments division, Yamaha spokesman Bill Nye said, two executive vice presidents, one in charge of administration and advanced planning and the other in charge of sales and marketing, are being reassigned to Japan. When the staff cutbacks are completed, he said, other organizational changes probably will be made.

Nye said no staff reductions are planned at any of the company's musical instrument manufacturing facilities. In the United States, Yamaha manufactures instruments in Grand Rapids, Mich., and Thomaston, Ga.

Several industry observers said they were not surprised by the move to cut overhead because they believe that Yamaha hired far too many people during years when the company was enjoying dramatic growth of sales and profits. More recently, they said, the company has suffered from increased competition from South Korean manufacturers and a failure to introduce significantly new products in the technology-driven field of electronic keyboards.

Yamaha officials say the company has suffered from a flattening in the electronic instruments market. Electronic instruments, principally keyboards, account for about half of Yamaha of America's annual sales. The company, part of the giant Yamaha Corp. conglomerate in Shizuoka, Japan, does not release sales or profit information.

But Yamaha Corp. itself--which does about 60% of its business in musical instruments--reported a 12% decline in net earnings for the first half of its 1989 fiscal year.

In addition to the sales slump, Yamaha of America officials said, the company has been caught in a profit margin squeeze because it hasn't been able to increase the price of goods it receives from Japan enough to compensate for the sharp drop in the buying power of the dollar.

The staff cutback is only one in a series of steps taken by Yamaha of America in recent months to shore up its operations. In September, the company reorganized its management team in Buena Park. Arimoto was named president and chief executive in that shuffle.

Arimoto said company officials had tried other strategies, including special sales programs, reducing internal operating costs, freezing all but essential hiring, increasing prices where possible and cutting advertising and promotions expenses, and turned to a work force reduction as a last resort.

The other methods, he said, had not been effective enough.

Don Griffin, president of the National Assn. of Music Merchants, said he believes that a staff reduction at Yamaha is needed if the company is to stay competitive. "Dealers' perception of Yamaha is that their overhead and staffing levels are enormous by comparison to their competitors," he said.

But a large Yamaha dealer in Southern California who asked to remain anonymous said the cutbacks will not solve Yamaha's problems. "We think the problem is they haven't come out with a home-run keyboard in a while. This may be a short-term Band-Aid for them. But they have to come out with the products," he said.

Nye and other Yamaha officials said the company had only 275 employees at its administrative offices in Buena Park in 1982 when it introduced a new electronic synthesizer that became wildly popular in the music industry. The company began increasing its administrative work force to cope with double-digit increases in annual sales, peaking at 450 workers last year--the same time sales began flattening.

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