Panasonic announced Thursday that it will layoff 17,000 employees in order to cut costs and adapt to a changing global market.
Panasonic witnessed losses in the first quarter of the year due to enormous reconstructing costs resulting in a reduction of their work force. The cuts will brings their workforce down to 350,000. Considered the second stream of significant layoffs in the last three years. As of March 2010, the company had 385,000 employees, and near end of April, it had lowered that number down to 367,000.
Panasonic also plans to streamline its business, consolidating three segments of the company into one. The company will absorb two of its acquisitions, Sanyo Electric and Panasonic Electric Work, into one entity.
“[At the end of the last fiscal year] Panasonic completed 100 percent acquisition of Sanyo Electric and Panasonic Electric Works. Now we’re focusing on integrating those businesses into our organization and as we do the structure of the business is changing, and overlapping businesses and functions are being eliminated and reduced.” – Panasonic spokesperson
Panasonic chief executive Fumio Ohtsubo said the restructuring will cost the company about 160 billion Yen ($2 billion), according to the Wall Street Journal.
“This comes as a result of uncompromising efforts to turn every business unit into a shape that is globally competitive,” Ohtsubo said at a press conference in Osaka, Japan, the company’s home base.
Panasonic has experienced losses in its TV division and it faces fierce competition from other Asian electronics giants such as LG and Samsung. Ohtsubo said he aims to place a new focus on products like solar panels and recharchable batteries to help mitigate some of the competition in the television market. The company posted a net loss of 40.7 billion Yen ($497 million) in the last quarter, and an 88.9 billion Yen ($1.09 billion) loss in the same period a year ago.
Additionally, Panasonic has also been hurt by the catastrophic 8.9-magnitude earthquake and ensuing tsunamis that ravaged Japan at the beginning of March. Although the country is recovering, many manufacturers, including Apple, have been hit with problems in their supply chains.
“We are forced to temporarily cut our output for many products, because we cannot get enough microcontrollers and condensers,” Ohtsubo said. “Japan is in a very tough position because of the quake, but outside Japan, fierce competition never stops, in both developed countries and emerging economies.”
Ohtsubo said the layoffs will ultimately help Panasonic, adding a projected 6 billion Yen ($73 million) to its profits this year and another $60 billion Yen ($734 million) in the following year.
On a positive note, Panasonic announced plans to build its North American headquarters in Newark, NJ. The state-of-the-art facility will house about 1,000 employees and is scheduled to open in 2013. The company’s U.S. headquarters are currently in Secaucus, NJ.