Sunday, December 29, 2013

Aiming to Reinvent Itself, Panasonic Moves Beyond the Living Room

With several partners, Panasonic plans to erect 1,000 houses in Fujisawa, using them to showcase its clean-energy technologies. The first batch, sheathed in protective plastic cladding bearing the name of the company’s residential division, PanaHome, is nearing completion.

“After shutting the factories, we thought, What is the latest contribution that we can make to society?” said Hiroyuki Morita, the Fujisawa project leader. “We reached the conclusion that doing something for the environment was very important.”

Like other troubled Japanese electronics giants, Panasonic is trying to get its own house in order. Consumer electronics like those that were once made at Fujisawa provided the foundation for Japan’s postwar economic miracle. But in recent years, South Korea and Silicon Valley have moved to the fore in technological innovation and marketing, while China has taken the lead in manufacturing.

So Panasonic is trying to reinvent itself as a provider of less visible but more profitable industrial technologies. It is focusing on two areas: homes and automobiles, where it supplies battery cells to makers of electric cars, like Tesla Motors.

Panasonic is not the first Japanese electronics giant to back away from the consumer business, but the transformation — if it succeeds — would be particularly striking. Others, like Toshiba, Hitachi and NEC, were just going back to their roots as providers of industrial equipment like power turbines, mining tools or telecommunications gear. Panasonic, founded by Konosuke Matsushita in 1918, started as a maker of consumer lighting fixtures.

Panasonic’s biggest Japanese rival in consumer electronics has long been Sony, which is sticking with smartphones, TVs, cameras and other devices despite tough times. And even Sony has been doing better with some behind-the-scenes products, like sensors for smartphone cameras, than with some of its own branded electronics.

In October, as Sony reported a loss for the most recent quarter, Panasonic posted a net profit of 61.5 billion yen, or nearly $590 million, and raised its earnings forecast for the full year.

“We believe Panasonic has turned the corner into sustainable profit expansion in nonconsumer electronics businesses,” Damian Thong, an analyst at Macquarie Securities, wrote in a note to clients.

Panasonic once tried to match Sony move for move. In the heyday of Japan’s dominance in consumer electronics, in the 1970s and ’80s, it was the brand that people chose when they really wanted a Sony Walkman or Trinitron TV but could not quite afford those brands.

In 1990, a year after Sony acquired Columbia Pictures, Panasonic, then known as the Matsushita Electric Industrial Company, bought another American entertainment business, MCA. But Panasonic, which is based in Japan’s down-to-earth second city, Osaka — Sony has its headquarters in the more worldly capital, Tokyo — struggled to make sense of Hollywood. Only five years later, it sold MCA to the Seagram Company.

Since then, the decline in the Japanese electronics industry has claimed several onetime stalwarts, including Sanyo, which was started by a brother-in-law of Mr. Matsushita’s in 1947. Panasonic took over what was left of the company in several stages, from 2008 through 2011.

After it acquired Sanyo, Panasonic accelerated its restructuring, cutting tens of thousands of jobs from the combined group, closing factories and getting out of several unprofitable businesses. The company’s president, Kazuhiro Tsuga, has announced plans to stop making plasma televisions and consumer smartphones and to scale back output of digital cameras. In September, Panasonic said it planned to sell a majority stake in its health care business to Kohlberg Kravis Roberts, the private equity firm. In November, it said it would stop making printed circuit boards, which are used in smartphones and other devices, at four of its plants in 2015.

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