TOKYO - MORE than 1,100 contract workers are losing their jobs at two subsidiaries of Japan's Canon Inc due to production cutbacks, officials said on Friday.

Canon, often hailed as a success story in Japan's recovery from a recession a decade ago, is joining other major Japanese manufacturers that are cutting output and jobs to cope with the global economic downturn.

Canon, which produces cameras and office equipment, said it had slashed orders to Oita Canon Inc, resulting in a reduction in the number of workers hired through contractors.

'We understand there is an employment adjustment among workers from the contractors,' a Canon spokesman said, adding that Canon itself did not propose the number of job cuts.

Canon directly employs about 4,600 regular and temporary workers at the subsidiary in Oita, southern Japan, but it does not know how many contract workers there are at the firm, the spokesman said.

The Oita branch of the labour ministry said it had learned that 1,097 contract jobs would be cut at the subsidiary and 80 others at a printer toner cartridge unit, Oita Canon Materials Inc, by the end of March.

'We have confirmed the figures through interviews with the contractors,' an official at the Oita Labour Bureau said.

Canon has lowered its projection for digital camera shipments to 27.9 million units from an initial 29.4 million for the year to March 2009.

In late October, Canon revised downward its business prospects and said it expected its first fall in net profit in nine years this year due to the global slowdown and the higher yen.

The firm expected net profit of 375 billion yen (S$6.07 billion) for the year to Dec 31. -- AFP