February 23, 2024

Panasonic to Cut 17,000 Jobs

Panasonic, the biggest Japanese maker of consumer electronics, announced a major reorganization Thursday under which it will cut thousands of jobs as it adapts its business to a changing global environment and absorbs recent acquisitions.

It will streamline operations along three main lines, down from five, and said it would cut about 17,000 jobs over the next two years from its work force of 367,000, which is already down from the 385,000 people it employed at the end of March 2010. The reorganization will cost about ¥160 billion, or $2 billion, the chief executive of Panasonic, Fumio Ohtsubo, said in Osaka, where the company is based.

The company, formerly known as Matsushita Electric Industrial, is restructuring to compete with South Korean and Chinese rivals in an industry that is increasingly focusing on emerging markets. It is also eliminating redundancies caused by its acquisitions of Sanyo Electric and Panasonic Electric Works, which were completed this year.

Already facing sluggish demand in Japan, its biggest market, Panasonic said the devastating earthquake and tsunami that struck the Japanese coast north of Tokyo on March 11 had further dimmed the domestic outlook.

Mr. Ohtsubo said he expected the restructuring to contribute ¥60 billion ultimately to Panasonic’s annual operating profit, largely from increased sales of solar cells, lithium-ion batteries, LED lighting and air-conditioning equipment.

Panasonic has a goal for sales of ¥9.7 trillion for the business year that ends March 2013. It said Thursday that its sales in the year through March 31 rose 17 percent, to ¥8.69 billion, though results were enhanced by the inclusion of Sanyo Electric’s sales. It reported net profit of ¥74 billion, compared with a year-earlier loss of ¥103.5 billion.

“The job cuts are really about eliminating duplication, said Yoshiharu Izumi, an analyst in Tokyo for J.P. Morgan Securities. “For example, Panasonic and Sanyo both produce washing machines. They want to consolidate that. They bought Sanyo for its batteries and solar-cells businesses, they don’t need some of the other parts.”

Panasonic bet heavily on plasma display panel technology and now ranks as the world’s top maker of the devices. But two South Korean rivals, Samsung Electronics and LG Electronics, and a Japanese rival, Sony, embraced the more popular LCD display technology.

The market for flat-panel display televisions, is approaching saturation in the developed world, Mr. Izumi noted, and the industry is looking more to India and China in search of profits.

Panasonic said it would increase purchases of LCD panels from outside vendors and increase production overseas. It also plans to overhaul its semiconductor business to reduce its reliance on large-scale integrated circuits.

Price competition in consumer electronics, always intense, has only gotten harder for Japanese manufacturers as the yen has strengthened. A stronger yen reduces profit earned overseas.

The dollar has fallen nearly 25 percent against the yen since the start of 2008, but even more tellingly, the Korean currency, the won, has lost about 35 percent of its value over the same period, giving the Seoul-based manufacturers a critical advantage even as their reputation for quality has come to equal that of their Japanese rivals.

Article source: http://www.nytimes.com/2011/04/29/technology/29panasonic.html?partner=rss&emc=rss

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