Panasonic Corp's move to close its last plasma television factory
completes a painful reckoning that has all but killed off Japan's TV
industry, once the pride of the country's post-war rise to technological
and economic power.
In a golden era that began in the 1970s, the
country's TV makers brought cutting-edge yet affordable technology and
brand names like Sony, the Trinitron and Panasonic into living rooms
across the West, at the expense of U.S. and European rivals.
after dominating the business for decades, companies like Sony Corp,
Sharp Corp and Panasonic have taken less than a decade to slide into
deep losses, becoming also-rans to a new breed of nimble, cash-rich
rivals like Samsung Electronics.
Osaka-based Panasonic will pull
out of the plasma TV business by the end of the financial year to March
2014, sources familiar with the situation told Reuters on Wednesday. The
news was first reported by the Nikkei business daily.
The end has
come sooner than expected, underlining company president Kazuhiro
Tsuga's determination to weed out weak operations as he focuses on
higher-margin products to end years of losses at the consumer
All that will remain of Japan's TV
manufacturing are three cutting-edge liquid crystal display (LCD)
plants, with Sharp's partially owned by foreign players, and a few
assembly plants. Storied Japanese brands such as Toshiba Corp and
Hitachi Ltd are outsourcing the bulk of their sets to other
Like the U.S. and European companies they defeated
in the industry decades ago, the Japanese can chalk up their fate as
much to hungry competitors as to their own mistakes.
just a failure of Japanese companies. It was also that rivals caught up
quite fast," said Kun Soo Lee, analyst at industry research firm IHS
"The Japanese companies were probably a bit sentimental, underestimated their rivals and didn't form a competitive strategy."
decline of Japan's TV business comes as the global industry faces a
pivotal moment - how to cope with consumers around the world beginning
to use their computers screen, laptops and tablets to watch more
on-demand broadcasts and media content.
Global TV shipments
dropped 6.3 percent in 2012, the first decline in over a decade
according to research firm IHS iSuppli, with the flat-panel market
reaching saturation after consumers in developed markets completed the
switch from cathode ray tubes.
The shrivelling of the industry
also comes as new leaders installed at Sony, Panasonic, Sharp and
Toshiba over the past year-and-a-half make a significant break with the
past - a difficult task in many Japanese corporations where the people
who ran companies remain within the organisations' structures even after
passing on the reins of leadership.
Japanese TV makers, while
overlooking the ability of their rivals to build up a global brand
quickly, did too little to protect their technology from rivals, were
too easily convinced to spend big on projects and too slow to make
strategic decisions to adjust to changing trends in demand.
plasma TV base at Amagasaki, a sprawling bayside complex midway between
the western Japan cities of Osaka and Kobe, typified the last two
problems. The newest of its factories had been in operation less than
two years when Tsuga, then a senior managing director running the TV
business, shut it along with another factory, leaving just one in
Billion dollar losses
Panasonic's TV division has
been a major contributor to the electronics company's combined $15
billion net loss in its two latest financial years. Its TV business
posted an operating loss of 88.5 billion yen in the last financial year.
Tsuga has waited until after Fumio Ohtsubo - the man who pushed
Panasonic head-first into plasma with the 485 billion yen Amagasaki
project - resigned as chairman in June to make the decision to pull the
plug on plasma completely.
Sources familiar with the situation
said on Wednesday that the No. 2 Amagasaki plant, the last in operation,
would be shuttered within months and that the company would take a 40
billion yen impairment charge to cover the cost, likely out of the 120
billion yen earmarked for restructuring at the beginning of the year.
The 400 to 500 workers will be reassigned to other facilities in the company, the sources said.
if they talk about reassignment, it won't be that easy," a worker in
the plant in his 40s said as he left the facility on Wednesday,
declining to give his name. "Things are tough at all of Panasonic's
plants in Japan."
The closure will take Japan completely out of
the plasma TV business, which has been eclipsed by sales of LCD
televisions in recent years as they moved into larger-screen sizes,
while South Korean rivals came to dominate plasma as well as LCDs.
which invented the Trinitron colour TV set that offered much brighter
images, dominated the industry along with its Japanese peers from the
1970s until the end of the century, driving U.S. competitors such as
General Electric, RCA, Sylvania and Magnavox out of the business.
those decades of dominance ended abruptly as the Japanese giants
stumbled in the shift to flat-screen TVs, taking billions of dollars in
write-offs for failed efforts to keep pace with nimbler rivals elsewhere
"Even with Panasonic withdrawing from plasma TVs, you
can't say that Japan's TV industry is finished restructuring," said one
analyst at a foreign securities house who asked not to be named. He said
the companies still have bloated sales and administrative staff padding
their fixed costs.
Panasonic still has a factory in western Japan
making LCDs, but has said it will shift production from 80 percent for
TVs to 80 percent for mobile gadgets. It has also launched pilot
production of organic light-emitting diode screens, a possible future
flat-screen technology, although Tsuga has said the company will be
cautious about investment.
© Thomson Reuters 2013