Last updated: November 14, 2012 10:04 pm

Panasonic unveils yet more job cuts

Panasonic, the struggling consumer electronics group that is Japan’s largest corporate employer, revealed thousands of new job cuts on Wednesday, raising the number of positions eliminated since late last year to almost 47,000 – about 13 per cent of its workforce.

The company, which like other Japanese electronics makers has suffered from declining competitiveness in televisions and other cornerstone products, last month warned that it was on course for its second $10bn net loss in two years.

On Wednesday, it said it planned to eliminate 8,000 jobs in the second half of the fiscal year to next March, on top of 8,800 cuts in the first half and 30,000 in the final six months of the previous year.

It declined to disclose what sort of jobs would be cut or where, saying only that provisions for early-retirement incentives and other restructuring costs were included in its latest financial forecasts.

Restructuring can be extremely expensive in Japan, a result of protective labour laws that make it nigh on impossible for all but near-bankrupt businesses to lay off workers.

Panasonic has shrunk its payroll, in part, by selling off underperforming divisions, but many of the reductions are a result of negotiated deals with employees involving months or even years of severance pay.

The company says it expects to spend Y440bn ($5.5bn) this year on restructuring, an amount that includes the cost of writing down assets such as underused factories as well as paying for redundancies.

Hideaki Kawai, Panasonic’s chief financial officer, revealed the planned job cuts in an interview with Reuters. The company later clarified the precise number of jobs involved. Mr Kawai said additional plant closures and unit sales would start at the beginning of next year.

He said that about a fifth of Panasonic’s 88 business units – which make everything from video recorders and electric shavers to solar panels – are losing money. Only half are of these divisions have an operating margin of 5 per cent, the three-year target set by Kazuhiro Tsuga, the company’s president in June.

“We won’t wait that long to tackle units that need to be dealt with,” Mr Kawai told Reuters.

Shares in Panasonic, Sharp and Sony are at their lowest levels in decades as losses have mounted. Last week Moody’s cut its rating on Sony’s debt to the lowest level above junk and warned of possible further downgrades, saying “stress on its balance-sheet metrics has recently increased substantially”.

Sony on Wednesday said it planned to issue Y150bn of convertible bonds to finance what it hopes will be a shift to more profitable technologies, such as image sensors and medical equipment. Part of the proceeds will pay for its Y50bn purchase of a minority stake in Olympus, the manufacturer of surgical endoscopes that was weakened by an accounting scandal last year.

Sony ADRs subsequently fell almost 9 per cent to $9.85 in US trading, cutting the group’s market value to less than $10bn.

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