Tuesday July 10, 2012
New Panasonic chief pledges to revive fortunes
TOKYO: In today's world of fast gadgets and fickle consumers, managers at Panasonic Corp, the sprawling, and struggling, Japanese electronics manufacturer, still refer to a 250-year business plan their founder wrote between the two world wars.
The 10-generation roadmap exhorted staff to end poverty and make consumer goods as abundant and cheap as tap water but probably didn't envisage selling millions of TV sets at a loss.
Under a new president, 55-year-old Kazuhiro Tsuga, Panasonic is shaping up for a post-TV future, say company executives and industry analysts.
Inheriting combined losses of more than US$15bil in the past four years and a market value slump of more than 80% to below US$20bil, Tsuga has promised to revive Panasonic's fortunes as Japan's consumer electronics industry slips further behind nimbler rivals in South Korea and Taiwan.
Tsuga is expected to reveal more detail of his strategy soon, involving painful job cuts in a bloated workforce of 330,000, shifting more production overseas and focusing more on white goods such as fridges and washing machines and solar panels and other energy-saving appliances.
In a series of interviews, Tsuga's deputies said they have been preparing restructuring plans that are now ready to launch to support his reform mission.
Tsuga was not always an obvious choice to lead Panasonic's revolution. He spent 25 years in research and development before being plucked in April 2008 to lead the automotive devices business making navigation systems, headlights and console electronics just as the financial crisis began to bite and clients took flight.
Tsuga embarked on a charm tour of auto executives in Europe and the United States, laid off workers and shuttered production including a plant in Atlanta, Georgia. Within months he turned his unit's US$100mil annual loss into a US$250mil profit, before moving to consumer electronics where he closed a plasma TV plant and axed 1,000 jobs.
It was the kind of tough love that produced results, and has catapulted Tsuga to the top job at a time when some brutal restructuring is needed.
Ahead of taking up his new post, Tsuga toured the factories and offices of a company that even by corporate Japan's conservative standards is bound by tradition from a collective early morning calisthenics workout to singing the company anthem and working in offices where a picture of founder Konosuke Matsushita is never far away.
Tsuga, himself, relishes the challenge.
“When I moved to audio-visuals, I was in charge of a business with several times the revenue of auto devices. As president, I head a company with several times that again,” he told reporters last month. He later told analysts he would not shy from “wielding a knife” and would pare costs where needed even after the loss of 36,000 jobs in the previous year. He has already said he would streamline the company's headquarters, with deep cuts expected in the 7,000 headcount there.
Analysts said Tsuga had made a “positive impression” as he set out to review Panasonic's product and sales strategies and regain profitability. “We will be waiting to see how far he can push reform across the whole company,” said Nomura Holdings analyst Shiro Mikoshiba.
Those reforms will see Panasonic shift its focus from the world's living rooms to its kitchens, and, in other areas, step back from the consumer and deal more with industry. Reuters