Panasonic Plans to Eliminate 17,000 Jobs Over Two Years in Reorganization
Panasonic Corp. (6752), the world’s largest maker of plasma televisions, plans to eliminate almost 17,000 jobs over two years as part of an overhaul to restore profitability to levels before the global financial crisis.
The workforce will drop at least 4.6 percent to 350,000 by March 2013 from 366,937 at the end of last month, costing about 160 billion yen ($2 billion) in restructuring fees over two years, the Osaka-based company said in a statement today. Panasonic said the reorganization will add 66 billion yen to earnings during the period and raise the operating margin to at least 5 percent, a level last reached in March 2008.
President Fumio Ohtsubo announced his second round of job cuts since the global financial crisis as he seeks to transform Panasonic into a leader of products such as solar panels and rechargeable batteries amid mounting competition in TVs. Panasonic spent more than $6 billion purchasing stakes in Sanyo Electric Co. and Panasonic Electric Works Co. last year to boost its energy-related businesses.
“Restructuring is inevitable after the acquisitions,” said Masahiro Mitsui, a Tokyo-based investment analyst at Federated Advisory Services Co. “Panasonic needs to boost its competitiveness even more as the energy-related businesses are getting more and more crowded with South-Korean and Chinese makers.”
Ohtsubo had previously eliminated more than 29,000 jobs and cut 200 billion yen in costs.
The maker of Viera sets will halt making new investments for both plasma and liquid-crystal display operations to revive profitability at the TV unit that competes with Sony Corp. (6758) and South Korea’s Samsung Electronics Co., said Ohtsubo. The company will seek alliances to purchase more LCD panels.
Shares of Panasonic, the first major TV maker to sell 3-D sets in the U.S., rose 2.4 percent, the biggest gain in a month, to close at 998 yen in Tokyo today. The Nikkei newspaper reported earlier today the company plans to cut 40,000 jobs as part of a restructuring.
Japan’s biggest maker of home appliances will eliminate overlapping operations in businesses such as white goods and car navigation systems, the statement said. The company will also consolidate marketing and research units and may sell some operations, it said.
Panasonic may reduce the number of plants by 10 percent or 20 percent from about 350 it has globally, Ohtsubo said. The company plans to expand outsourcing chip production and may merge with Panasonic Electric, he said.
The reorganization will add 6 billion yen to operating profit this fiscal year and 60 billion yen the following year, the company said.
Panasonic will seek overseas alliances to expand in industrial-use solar systems, Ohtsubo said. The purchase of Sanyo, which makes roof-top solar panels for households, was part of its plan to expand in energy-related businesses amid growing competition in the TV market.
Panasonic aims to generate at least 760 billion yen in sales from energy devices in the year to March 2013, the company said.
“The market wants Panasonic to have bigger and speedier changes to compete with global rivals,” said Mitsushige Akino, Tokyo-based chief fund manager at Ichiyoshi Investment Management Co. “Japanese manufacturing companies must restructure their old business models. More strategic approaches are needed to survive today’s global competition.”
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