By Ingrid Lunden
The Japanese consumer electronics industry continues to feel the squeeze in the economy, with mass layoffs of workers representing one of the more painful effects. In the latest development, Panasonic Corp. (PC) says it will reduce its workforce by 10,000 employees by the end of this fiscal year, which completes in March 2013. The company had already warned that it will post losses of $10 billion for the full year, because of write-offs in its mobile, solar panel and lithium battery businesses.
The mobile business in particular has been seeing some tough times, with Panasonic Mobile reportedly preparing to pull out of the European market altogether, leaving it covering only Asia going forward.
While Panasonic has yet to make an official statement about the 10,000 layoffs, CFO Hideaki Kawai made the plans public in an interview with Reuters. They are part of a wider strategy to reach operating profits of $2.52 billion (¥200 billion) in the next three years. At the moment a fifth of its 100 business units are losing money, and there are plans for some of these to also be sold off.
Panasonic, along with other Japanese consumer electronics giants, has been between a rock and a hard place for a while now: on the one hand, there is the global economic downturn that has seen reduced consumer spending; on the other, the rise of Chinese and Korean, and other Asian companies making similar goods for significantly cheaper prices - or simply better quality, more desirable goods - has impacted these companies' margins. Panasonic is a grandaddy of Japanese consumer electronics - it was founded in 1918 and remains Japan's biggest employer - but in the last five years, it has posted four annual net losses.
The 10,000 cuts come on the heels of 36,000 layoffs at Panasonic last year. Several other Japanese consumer electronics giants have also faced mass layoffs. These include 11,000 workers reportedly getting the chop at Sharp (made public in September), and Sony (NYSE:SNE) announcing redundancies of a further 2,800 workers in October, part of its plan to cut 10,000 in total.