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As it turns 100, Panasonic changes course once more in tightening market

JIJI

With a track record of overcoming past crises by adapting to changing business environments, major electronics maker Panasonic Corp. marked its 100th anniversary last Wednesday.

The company was launched by the late Konosuke Matsushita, a legendary corporate manager, together with his wife and his brother-in-law, Toshio Iue, who later founded Sanyo Electric Co., now a Panasonic unit.

Panasonic, which in 2008 changed its name from Matsushita Electric Industrial Co., has grown to be a giant corporate group with over 270,000 employees. “We’ve continued business while adapting to different times,” said Akio Tanii, Panasonic’s fourth president, who took the helm for seven years from 1986.

The company’s story began on March 7, 1918, when Konosuke Matsushita established Matsushita Electric Housewares Manufacturing Works at his home in Osaka.

The firm launched a two-way socket that allowed lighting and electric equipment to be used simultaneously. At that time, in the Taisho Era (1912-1926), there was only one electric outlet in many houses. The product proved a big hit.

The founder believed in the importance of business contributing to society. One of his corporate philosophies was to provide products as plentifully and inexpensively as tap water in order to eliminate poverty. Japan’s postwar period of high economic growth began in the 1950s, when black-and-white television sets, washing machines and refrigerators were the three must-have home appliances.

Matsushita helped the spread of home appliances in the period by operating National-brand home appliance shops, now Panasonic shops. The number of such shops peaked at some 27,000 in 1983.

The collapse of the information technology bubble in 2001 dealt a huge blow to Matsushita. In the fiscal year to March 2002, Matsushita plunged into a consolidated net loss of some ¥430 billion. Then-President Kunio Nakamura turned around the business by cutting over 10,000 jobs, despite the founder’s pledge to protect employment.

Matsushita later stumbled again, this time in the flat-screen TV sector. The company invested about ¥600 billion in its plasma TV business to compete with firms strong in liquid crystal screen production, including Sharp Corp., but lost heavily. Investments included a plant in the city of Amagasaki, Hyogo Prefecture.

The increasing presence of South Korean makers, including Samsung Electronics Co., eroded TV prices and Matsushita’s profits.

Matsushita incurred consecutive group net losses of more than ¥700 billion in the years to March 2012 and to March 2013.

“One business will not be enough for the next 10 and 20 years, much less 100 years,” said Kazuhiro Tsuga, who became Panasonic president in June 2012.

Under Tsuga, Panasonic withdrew from loss-making operations, switched to high value-added products for home appliances, and aimed to make auto-related operations one of its profit pillars. In the year through March 2014 the company turned its business around, posting some ¥120 billion in consolidated net profit.

A growing number of Chinese, South Korean and Taiwanese manufacturers allow Japanese consumers to purchase low-priced home appliances, such as TVs, personal computers and laundry machines. Japanese makers have lost their former dominating presence in these markets. They now focus on the production of products with more sophisticated functionality, including the three must-have home appliances for double-income families — robotic cleaning devices, fully automated washers and dryers, and dishwashers — aiming for bigger profitability from high-priced items that sell well.

Amid the spread of electronic and autonomous vehicles they have also seen potential with in-vehicle equipment, with the barrier between electronics makers and automakers slowly eroding. In December last year, Panasonic and Toyota Motor Corp. announced an agreement to team up on vehicle batteries.

But a delay in mass production of a new model from major U.S. electric vehicle maker Tesla Inc., a U.S. partner of Panasonic, has affected the Japanese company’s battery supply.

Panasonic still has a long way to go to build this business into a new source of profit, analysts say.