Takara and Tomy to lay off 15 percent of workforce

Japanese toymakers announce cost-cutting strategies for their upcoming merger.

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In a press meeting held yesterday, Japanese toy makers Takara and Tomy announced the first specific plans regarding business strategies after their merger on March 1, 2006. The two companies plan on reducing costs by 19 billion yen ($173 million) in the first three years after joining together as Takara Tomy. As a part of the cost cut, Takara and Tomy will lay off 15 percent of their combined workforce by next March, which accounts for 640 employees. Most of the layoffs will be on Takara's side, where there seems to be more redundancy in employee duties.

To further cut costs, Takara and Tomy will scale back on their range of products by 30 percent, down from 7,800 items to 5,400. The two companies will also reduce promotional expenses and operations that overlap. In addition, Takara will retreat from its little-known home electronics business and electric car business, both of which have been losing money.

Takara and Tomy are currently Japan's second- and third-largest toymakers, respectively. The two companies, of course, also publish games and interactive adaptations of their owned intellectual properties. After the merger, Takara Tomy will focus its operations on its core toy business and the expanding digital entertainment sector.

During the press meeting, the two companies announced they have co-established a new subsidiary with mobile-content provider Index Corporation, which acquired 22 percent of Takara's stake from Konami in April. Named T2i Entertainment, the subsidiary will function as the central office for Takara and Tomy's content production and digital entertainment business.

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