Fuji Photo Film Co. said Tuesday it will cut 5,000 workers, one-third of its image product division, due to the rapidly shrinking photo-film market.

The second-largest film maker after Eastman Kodak Co. of the U.S. said it also will whittle down its range of photo film but has no plans of withdrawing entirely from the film market.

"We have a social responsibility (to keep manufacturing film), and digital is not the answer to everything," Fuji Photo CEO Shigetaka Komori told a news conference. "We will carry out drastic restructuring so we can keep" the photo-film business.

The firm said it is overhauling its film operations because of a worse than expected fall in the global market.

"We had initially projected an annual 10 percent drop in color film demand," Komori said. "But it is falling by more than 20 percent."

The company will spend 165 billion yen by March 2007 to revamp its photo-film business. It will terminate 1,000 domestic jobs and 4,000 overseas by September and close several of its photo-film production lines, officials said, without giving specific locations.

Fuji Photo's announcement is the latest in a series of drastic moves that began last month.

In early January, Nikon Corp. said it would phase out its traditional film-camera business to focus on digital products. Konica Minolta Holdings Inc. followed suit shortly afterward, saying it will exit from photographic equipment altogether.

Fuji Photo will have to reduce its photo-film lineup as a result of the reductions in production, said CEO Komori, adding it will continue to manufacture the QuickSnap disposable camera due to strong overseas demand.

The firm will also move most of its FinePix digital-camera production to China from Japan.