Japanese consumer electronics giant Panasonic Corp said it would cut another 17,000 jobs and close up to 70 factories around the world over the next two years in a bid to pare costs and keep up with Asian rivals.
The maker of Viera TVs and Lumix cameras said it was aiming to trim its workforce of 367,000 at the end of last month to 350,000 by March 2013. The cull comes on top of nearly 18,000 job cuts made in the past business year, for a total of around 35,000 over three years.
The figure is huge, but so is the company, and for an old-fashioned one like Panasonic, this is a big move, said Toru Hashizume, chief investment officer at Stats Investment Management in Tokyo.
Panasonic set aside 110 billion yen ($1.3 billion) in restructuring expenses for the current financial year.
Company President Fumio Ohtsubo said Panasonic had about 350 manufacturing bases around the world and would look to merge operations where it could.
I can't say for sure, but I think it's possible we will cut the number of manufacturing bases by 10 or 20 percent, he said, declining to comment on which countries might see job cuts. A Panasonic spokesman said the company did not even have a figure for the number of countries they operate in since recently taking over some other companies.
Once unrivalled, Japan's consumer electronic firms are facing increasing competition from cheaper Korean and Chinese producers in particular.
Panasonic is seeking to shift its focus to environmental and energy-related businesses such as rechargeable batteries in order to duck competition from Samsung Electronics, LG Electronics and others in consumer technology.
As part of that strategy, it announced last year it would pay $9.4 billion to make Panasonic Electric Works and Sanyo Electric Co wholly owned units.
Panasonic absorbed a combined 160,000 workers in that move and was now seeking to shed staff in overlapping businesses, particularly abroad, said the Nikkei newspaper, which first reported the job cuts.
The units make a wide range of products including rechargeable batteries, factory robots, electronic components, lighting and solar panels.
QUAKE HITS PROFITS
Panasonic started off making electrical sockets in 1917 and now comprises almost 700 companies spread around the globe. It employs more than 220,000 people outside of Japan.
Shares of the electronics conglomerate closed up 2.4 percent in Tokyo, outpacing a 1.6 percent gain in the benchmark Nikkei 225 index.
Unlike their western counterparts, Japanese companies tend to avoid dumping large numbers of workers, particularly at home.
The latest staff cuts compare with past Panasonic restructurings including 26,000 workers shed after the information-technology bubble burst, and about 15,000 in the aftermath of the Lehman shock. Some of the latest job cuts include headcount lost through the sale of unprofitable units.
On top of the stiff competition and a strong yen, which saps export earnings, Japanese electronics companies have had to deal with the impact of last month's devastating earthquake and tsunami, which has hit earnings hard.
Panasonic said its operating profit for the fourth quarter ended March fell by almost a third to 41 billion yen.
It did not give a forecast for the current year because of uncertainties following the quake.
Operating profit was 305.3 billion yen ($3.7 billion) for the year just ended, slightly better than a consensus of 297 billion yen, based on Thomson Reuters SmartEstimate, which places greater weight on recent estimates by highly rated analysts.
The SmartEstimate for the current year to March 2012 is for a profit fall to 260 billion yen as the company struggles with production woes and weak domestic demand following the earthquake.
Panasonic said without the impact of the quake, its forecast for this year would have been for an operating profit of 310 billion yen. ($1 = 82.220 Japanese Yen)
(Additional reporting by Arpita Mukherjee in Bangalore and Nathan Layne, James Topham and Tim Kelly in Tokyo; Editing by Lincoln Feast and Dean Yates)