Japan's Panasonic fell short of announcing any job cuts in its medium-term business blueprint, though it will spend 250 billion yen ($2.7 billion) over the next two years to revamp its TV, mobile phone and semiconductor units.
President Kazuhiro Tsuga, who last year surprised investors by describing Panasonic as a "loser" in consumer electronics, told reporters in Tokyo on Thursday that the near-century-old company will expand its automotive and housing development businesses as it pulls back from those unprofitable consumer electronics enterprises.
Like Sony and Sharp, Panasonic's TV unit has been battered by Samsung Electronics and LG Electronics as the Korean companies pushed out cheaper products. Panasonic, Japan's biggest commercial employer, is set to report its second straight annual net loss and is now under pressure to dump weak businesses and trim its payroll.
"Panasonic has talked about selling assets, but without cutting workers too, it will come across as a restructuring plan that lacks teeth," said Makoto Kikuchi, the CEO of Myojo Asset Management in Tokyo. "Panasonic does not have the sort of corporate culture which you would expect to see serious layoffs."
Panasonic said its 88 business units would be re-arranged into 49 units under four divisions. It did not say if jobs would be lost.
Tsuga has slimmed down his headquarters from around 7,000 people to 150, small enough, he says to fit everyone in the same room. But even after more than 40,000 job losses in the past two years, Panasonic still employs more than 3,00,000 people.
Strict labour laws and the high cost of layoffs, which in Japan can be as much as three years' salary, often dissuade businesses from deep cuts.
In the case of Panasonic, founder Konosuke Matsushita once exhorted his managers to "make people before making products."
Tough love
Taking over as president in April last year, Tsuga, 55, promised tough love to rehabilitate a company that got its start in 1918 making extension sockets and bicycle lamps.
Tsuga, who joined Panasonic in 1979 with a degree in biophysical engineering, spent his first 29 years at the company in research and development on technologies including voice synthesisers.
In 2003, he led talks with competitors and Hollywood studios on establishing a Blu-ray standard for DVDs, making his first move into management in 2008, when he was put in charge of automotive components. He counts a lack of tribal attachment to any one part of the Panasonic's business, which ranges from hybrid car batteries to washing machines, as an advantage.
In October last year, Tsuga bit the bullet on non-performing businesses by writing down billions of yen in tax-deferred assets and goodwill related to its mobile phone, solar panel and small lithium battery businesses. The result of that is a forecast net loss of $7.8 billion in the year that ends Sunday.
Since peaking at $97 billion in 2007, Panasonic's sales have contracted by a fifth. Over the past decade, cumulative net loss adds up to about $13 billion.
Tsuga has set an April start line for all of Panasonic's business units to reach a minimum 5 percent operating profit margin. Tsuga has also halted dividend payments for the first time in more than six decades.
Tsuga's plan "isn't about what they are going to do, it's about what they are going to dump," said Yuuki Sakurai, the CEO and president of Fukoku Capital Management in Tokyo, ahead of Thursday's briefing.
Panasonic will seek external investment in its healthcare business, which Tsuga said he will personally oversee.
Finding a partner to invest in its healthcare business means Panasonic will not need to divert resources away from other units in need of funding to expand its scope and sustain growth.
Panasonic also said it will also sell its majority 67 percent stake in a logistics business to Nippon Express.
Doing so would bolster cashflow, helping Tsuga maintain a target to keep it at a minimum of $2.1 billion. Any shortfall will be made up from sales of land, buildings, businesses and other assets.
In the year ending on March 31, that garage sale, including the $530 million sale of a 43-storey office building in Tokyo, will add up to around $1.3 billion.
For the next business year, Panasonic said it expects net income to reach 50 billion yen.
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