Panasonic bringing most production back to Japan
Panasonic Corp. plans to transfer most of its home appliance production back to Japan starting in spring due to a weaker yen and a jump in labour costs abroad, according to the company.
Panasonic, which now reimports household appliances such as washing machines and air conditioners from abroad, made the decision as overseas production has become less advantageous.
It remains to be seen whether other companies will follow Panasonic’s example and resume manufacturing most of their products in this country, observers said.
The domestic sales of Panasonic’s home appliances are estimated at about 500 billion yen, about 40 per cent of which are produced overseas, mainly in China.
Top-loading washing machines, almost all of which are currently produced in China, will be the first product Panasonic will resume manufacturing in Japan - at a factory in Fukuroi, Shizuoka Prefecture.
The manufacturing of microwave ovens, almost all of which are now produced in China, and air conditioners for household use, also produced in that country, are to be subsequently brought back to Kobe and Kusatsu, Shiga Prefecture, respectively.
Panasonic said it plans to expand employment with the increase of domestic production.
The company also plans to hold down its capital investment to several billion yen by using empty spaces at its domestic plants.
While the company is to ask parts manufacturers to return their production to Japan, its Chinese factories will continue manufacturing products for Chinese consumers.
Panasonic said a 1 yen drop against the dollar reduces profit by about 1.8 billion yen on an annual basis. If the yen stabilizes at the 120 yen level against the dollar, this will cause a significant decrease in profit even if the company cuts back on costs, it said.
Though Japanese manufacturers have moved their production bases overseas, an increasing number of firms have shifted their stance toward production back home due to the depreciation of the yen in recent years.
Daikin Industries Ltd., for example, moved part of its air conditioner production from China to Japan. Nissan Motor Co. is also considering the expansion of domestic sales of vehicles for export.