Panasonic has just announced it will minimize operations during the next two years by reorganizing overall operations and reducing its five main business units to three: Consumer, Components and Devices, and Solutions. That move will close nearly 70 factories and shave some 17,000 jobs from the company’s current workforce of 367,000.
The cuts aren’t likely to influence production of Panasonic’s pro video products, though the company has said in an effort to reduce costs it will shift some of its production, including that of lithium-ion batteries, from Japan to China.
The company’s display business, however, with its longtime reliance on plasma-screen technology, will get an overhaul. Recent competition from LG, Samsung and Sony, who have responded to the increasing consumer demand for LCD screens, has forced Panasonic to reexamine its business model. The company now says it will move some of its plasma display production to China and begin purchasing LCD panels from third parties.
The substantial layoffs have become an unfortunate annual trend for Panasonic, still the world’s largest electronics manufacturer. Since March 2010, the company has eliminated 18,000 jobs. In 2009, during the height of the recession, it cut some 15,000 positions. The company says the proposed cuts, though indirectly influenced by Japan’s devastating earthquake and tsunami, can mostly be attributed to overlapping business units and product lines that resulted from Panasonic’s acquisition of Sanyo, completed earlier this year.
Back in 2008, despite the dismal global economic outlook, Panasonic began its bid to boost profits through a series of reorganization and rebranding efforts. Then called the Matsushita Electric Industrial Company, the company first sold its subsidiary Victor of Japan—better known to the rest of us as JVC—and announced its intention, as the newly named Panasonic Corporation, to acquire Sanyo. The new Sanyo product lines have reportedly boosted Panasonic’s overall profits 17 percent higher this year over last.
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