Thousands of HQ staff may lose jobs at global electrical giant

06/02/2012
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TOKYO (majirox news) — Following record stunning losses of nearly 10 billion dollars last year, media reports say giant manufacturer Panasonic Corporation is preparing to make drastic cutbacks to its headquarters workforce before the next fiscal year in April 2013. The current President of the company, Fumio Ohtsubo, has already announced his intention to take responsibility for the poor corporate performance by resigning.

The Japanese newspapers, including the Nikkei business weekly, say the electronic manufacturer is cutting half its staff, between 3,000 to 4,000, at their headquarters in Osaka prefecture.

Panasonic is a brand which is instantly recognized everywhere, and the company’s products are to be found in almost every home, not just in Japan, but throughout the whole world. Why would such a well-respected company need to take these drastic steps?

“The main reason is that they acquired SANYO Electric several years ago, so there is a lot of excess staff, employment redundancy, and the white collar productivity is pretty low in the headquarters office,” said Koji Sakao, CEO of Veritas Consulting in Tokyo. “They don’t need such a number of people there.”

The cuts are also an effort to compete in the business environment of the electric industry, including the appreciation of the yen, decreasing prices and slow domestic demand.

However, this move has implications that spread outside the walls of Panasonic. For many years, the HR policies of traditional Japanese companies such as Panasonic have been centered on such practices as lifetime employment, or promotion based on seniority rather than merit. Letting go of thousands of headquarter staff rings the death toll for these ways of working, not just in Panasonic, but in other Japanese enterprises.

“This will be a clear message to Panasonic employees because Panasonic declared that they are no longer going to continue their old style management like lifetime employment or seniority basis HR systems, Sakao said. “For the whole Japanese world it will have a profound impact on it because Panasonic is regarded as one of the most highly admired companies and it will be role model for other Japanese companies.

Though Japanese production efficiency is globally admired, Japanese office workers fail to meet the same standard.

“There will now be no hindrance in operations, faster decision making, or difficulties in pursing their strategic adjectives, so they would be able to earn profits by cutting staff,” he said. “They will also save by reducing social insurance which is very high in Japan.

The company will cut its main office mainly by an early retirement program and employee transfers to subsidiaries.

Though this move has not been officially announced by Panasonic, in keeping with common Japanese corporate practice, details seem to have been leaked in advance to prepare the way.

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