by Michael Kanellos
Panasonic (PC) laid out a plan Wednesday to weave together its many divisions to become the largest company in the world when it comes in green electronics.
By 2018, the company wants to obtain 30 percent, or 1 trillion yen ($12 billion), of its expected revenue from its energy systems business. Now, the group accounts for approximately 15 percent of the company's revenue.
Panasonic also hopes to hit a carbon dioxide peak from its operations, and from the way consumers use its products to peak in the same year. If it hits this mark, carbon emissions will be roughly level with 2010 emissions and 120 million tons less than a business-as-usual scenario.
Approximately 16 percent of the materials used in new products will come from reclaimed and recycled materials and 99.5 percent of waste generated at factories will be recycled. It will place an emphasis on replacing conventional chemicals with sustainable materials.
The goal will largely come from three large product groups: energy efficient appliances, components and grid equipment; batteries and power storage; and renewable energy systems like solar panels and fuel cells. Ideally, Panasonic will be able to position itself as a global supplier, in a manner similar to the strategy taken by General Electric (NYSE:GE) and Siemens (SI) in recent years.
“We are trying to offer a whole solution,” said Fumio Ohtsubo, Panasonic’s president, in a meeting with reporters at the Panasonic Center in Tokyo.
Ohtsubo even mentioned that Panasonic is working on an ethanol car project in Brazil.
The strategy derives from equal parts of opportunity and desperation. The growing market in green technology prompted a corporate reorganization in recent years. It bought 51 percent of Sanyo (OTC:SANYY), a major supplier of lithium-ion batteries and solar panels, and will likely buy the remainder in 2011. It also absorbed Matsushita Electric, an industrial equipment supplier and a sister company within the conglomerate.
The push toward green, meanwhile, will also help Panasonic diversify from consumer electronics, an industry hit hard by commoditization.
“We needed to produce a new line of business,” he said, adding that energy provides “a lower risk of commoditization.”
Solar manufacturers will either scoff or be amazed at that last statement.
“After the financial crisis, the Japanese economy was hard hit,” he added. “That has dealt a big blow, particularly to the manufacturing industry.”
In a sense, Panasonic is going back to its roots. The company will turn 100 years old in 2018. Its first product was an “attachment plug.” It screwed into light sockets and let consumers tap into power to run other appliances. In 1918, Japanese homes didn’t have wall sockets, so the attachment was the only way to use electricity for things other than bulbs. Ohtsubo then pulled out one of the original attachments from his pocket and noted that the company made them from the screw-in base from recycled Edison bulbs.
What does holding the number-one slot in green electronics mean? The sprawling category defies easy categorization, but Panasonic will largely concentrate on producing brand name products like dishwashers, LED light bulbs and refrigerators, as well as those faceless electronic components found in everything.
Disclosure: No positions