Panasonic Announces Its Intention to Cut about 5000 Workers

Since about 3 years back, when Panasonic Corp received the UTH tax credit in Newark for about $102.4 million (a tax credit based on investment and number of workers employed), it seems to be on a layoff spree throughout the world. The company which employs about 300,000 workers worldwide and is one of the biggest employers of Japan has cut more than 40 thousand jobs within the last two years citing business losses.

Earlier this month, Panasonic said that it saw its profit rising 55 percent in shifting away from consumer gadgets, though its full year report in Japan showed $7.5 billion loss – the biggest loss ever reported by any Japanese company in the non-financial sector. Its annual financial report submitted in Japan also showed a 270 percent rise in operating profit. Hidden behind the net loss was the story of Panasonic acquiring a major Japanese company, Sanyo.

However, this week Panasonic Corp announced that it would cut around 5,000 workers from its automotive and industrial division to bolster its operating profit margin. The company expects laying off the workers would help it raise its overall operating profit to the minimum benchmark of 5 percent decided by Kazuhiko Tsuga, the president of the company.

The automotive and industrial division employs about 110,000 workers and constitute about a third of the total workforce of Panasonic Corp. Currently Tsuga’s strategy seem to be optimizing and strengthening the division in a bid to shift away from consumer electronics and focus on manufacturing products meant for supply to other companies.

Yoshihiko Yamada, the head of the automotive and industrial division said during a presentation to investors in Tokyo that, “A reduction in labor costs will be a big part of our plan to improve profitability.”