JAPAN NEWS: Panasonic braces for tougher times ahead, cuts spending on flatscreen TV expansion

12 Jan 2009

Panasonic Ohtsubo FY0910
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Panasonic President Fumio Ohtsubo (right) has announced the company's management policy for the next financial year. And his presentation makes pretty sobering reading.

It promises 'drastic structural reforms' including the possible closure of underperforming overseas operations, problems achieving planned sales and almost a quarter lopped off the investment plans for the company's plasma and LCD plants in Japan.

Speaking in Osaka, Japan, on Friday, Ohtsubo said that "the company may not be able to achieve its goal of double-digit growth in overseas sales", and that its four strategic businesses, including digital AV, "may not be able to achieve their targets in the current economic condition".

Emerging markets
To counter this situation, the company plans to expand its operations in emerging markets, such as Brazil, China, India, Russia and Vietnam, and make a shift to lower-priced products. It will also carry out "a radical review of its business selection and concentration by clarifying which businesses to expand and which to withdraw from.

"The company will streamline its operations with strong possibility of withdrawing businesses and products which have had negative earnings since fiscal 2007. In principle, the company will close down its overseas operating sites which fall under the criteria for withdrawal."

Flatscreen investment cuts...
Investment in its fifth plasma plant, in Amagasaki, Japan, will be cut by 70 billion yen (about £520m), while its ISP Alpha LCD plant in Himeji will see a reduction of 135bn yen, or about £1bn.

...but twice as many TV ranges
Despite that, Panasonic is targeting a 50% growth in its sales of flatscreen TVs, to a total of 15.5m units, and as part of this plan will double the number of ranges it offers from four to eight, and build relationships with larger-scale retailers in the US and Europe.

It's also still on track to launch 'white goods' - washing machines, fridges and the like - in Europe this Spring, aiming to have products in all 17 main European markets by next year.

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The Pioneer deal will be fine - they're just not building to produce to such a high capacity, that's all. Sensible move considering current global situ, really.

But yes, if Pana's having to make these moves, I fear for the smaller companies - as Mr Ohtsubo predicted when I interviewed him last year...


I wonder how this leaves the Pioneer business relationship (outsourced plasma panels).

Aye, scary innit?

Clearly Panasonic thinks it can emulate its domestic success in white goods in other markets, while targeting emerging markets with products such as TVs and the like.

But when a company this big shows signs of the jitters...

i was trying to figure out how it makes sense to announce that you're potentially closing so much of your business down (subject to the assessment mentioned in the article), while expanding into white goods in developed countries.

my head hurt. so i gave up.

i shoulda studied business and economics cuz im banjaxed, as me father would say.