Panasonic Corp. will increase the amount of parts bought outside Japan this year to help cut procurement costs by ¥500 billion, according to a senior company official.
The company will acquire about 57 percent of its parts and materials abroad in the fiscal year to next March, up from 43 percent two years ago, Masaaki Fujita, who oversees Panasonic’s procurement and distribution operations, said Wednesday in Osaka. The overseas ratio will probably continue increasing as the company intends to expand purchases in Asia, he told reporters.
Panasonic is also moving the headquarters of its $57 billion procurement operation from Osaka to Singapore in the fiscal year starting next April, Fujita said.
The shifting of procurement is part of Panasonic’s plans to revive profit to levels before the global financial crisis. Other measures include cutting jobs, consolidating units and increasing the portion of production by outside contractors.
“It’s not easy to continuously reduce cost without a bold move” amid the strengthening yen and rising material prices, said Fujita.
The world’s No. 4 television manufacturer, which spent about ¥4.4 trillion last fiscal year buying parts and materials, is cutting the number of suppliers by about 40 percent globally in the two years to March 2013, while aiming to find new Asian suppliers in countries including Malaysia and Thailand, Fujita said.
The company has said it expects to cut procurement expenses by ¥500 billion in each of the three years to March 2013.
Panasonic bought about 57 percent of its parts and materials in Japan and 22 percent from China in the fiscal year ended March 2010, Fujita said. Domestic purchases may decline to 40 percent in the fiscal year ending March 2013, while those from China will increase to 30 percent, he said.
Components and materials from Asia — excluding China and Japan — may account for 20 percent of the total in the next fiscal year, up from 11 percent three years ago, he said.
Panasonic rose 1 percent to ¥747 at the close of the Tokyo Stock Exchange on Wednesday. The shares have declined 35 percent this year, compared with the 17 percent drop in the broader Topix index.
The maker of Viera televisions is building a new plant in Vietnam to make substrates used in smartphones, Panasonic said earlier this month.
The company will also start production at new appliance factories in India and Brazil in the second half of 2012, the company said in April.
Panasonic plans over two years to cut 17,000 jobs, eliminate overlapping operations, consolidate units and expand outsourcing of production to raise its operating margin to at least 5 percent in the fiscal year ending March 2013, up from 3.5 percent in the last fiscal year.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.