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EPTE Newsletter from Japan - Panasonic Cuts 5000 People

Topics of the Week

Panasonic Cuts 5000 people

Consumer electronics giant Matsushita Electric Industry (Panasonic), announced a company wide restructuring effectively reducing manpower by 10% or 5000 workers in Japan over the next three months. Another phase of the restructure includes adding 800 entry level positions next year.  Since Panasonic expects to post strong financial results for fiscal year ending March 31, 2007, Americans may view the timing of the restructure contrarian to normal economic matters. Why would Panasonic restructure now?  

For the past two decades, Panasonic has shifted manufacturing overseas to take advantage of low cost labor and reduce manufacturing costs.  Sending jobs overseas eliminated a number of job functions at home, and created a surplus of employees. New business ventures have created a lot of positions at Panasonic, and many employees transferred to these new positions; unfortunately, it is not enough to provide jobs for 5000 employees. The company's policy on reducing their work force is timed during years where solid financial results are realized, and they can offer generous severance and retirement packages.

The restructuring initiative will benefit both Panasonic and the employee who is part of the redeployment. The company will reduce its payroll costs and tax payments, and employees will have the opportunity of enjoying an early retirement. The split will be amicable, and employees will indirectly support the company as a loyal customer purchasing their consumer products.The approach Japanese companies have adopted relative to shrinking their workforce has evolved and is more compassionate than 20 years ago. Many old and large companies share similar opinions. During the 1980s and 90s, it became fashionable for Japanese companies to us an American style for making decisions to increase or decrease their labor force. During prosperous times, companies would begin hiring and when business was off or finances were tight, they would switch modes and begin laying off workers.  These employees received less than generous severance packages and little or no retirement packages. The companies minimized their financial duties from a short-term stand point; however, fired employees left the company with a bad taste in their mouths, and were very unhappy with their previous employer. The disgruntled employees would not purchase products manufactured from their old employer, and even sold valuable information to the company's competitors. 

I have no opinion as to which approach is the correct one.  The companies have different opinions and different business directions based on other factors. But, I think that the direction Panasonic has used is not a bad idea to grow stability for the long term future. 

Dominique Numakura, DKN Research (dnumakura@dknresearch.com)

Headlines of the week

1.      Shinwa Frontech (Middle class PWB manufacturer in Japan) 2/26

Has change its name from Shinwa Co. It will build a new plant for the high currency circuits of power supply parts.

2.      Silver Seiko (Electronics equipment manufacturer in Japan) 2/23

Has acquired whole stakes of Soken, a PCB design and prototype manufacturing shop in Japan by 4 billion yens to expand the design and R&D capabilities.

3.      NEC (Major electronics company in Japan) 2/26

Has unveiled the new technology of the organic radical secondary battery. It is bery thin and flexible.

4.      Samsung SDI (Major display manufacturer in Korea) 2/27

Has developed the world thinnest LCD panel (0.74mm thick) for the cellular phone applications.

5.      Somar (Packaging material supplier in Japan) 2/28

Will invest 3 million US$ in China to build a new manufacturing plant of the insulation resins for the SMT assembling process.

6.      Senju Metal (Major soldering material supplier in Japan) 2/28

Has unveiled new lead-free soldering alloys (Sn-1Ag-0.7Cu and Sn-0.3Ag-0.7Cu) as the low cost solution instead of silver rich alloys.

7.      Shikoku Chemical (Specialty chemical supplier for PWB process) 2/27

Will invest one billion yens to build a new plant for the chemicals of the surface treatment "Tough Ace" for the printed circuit board process.

8.      Panasonic (Major electronics company in Japan) 2/28

Will start the assembling of the large size PDP in Russia for the booming demands in western Europe.

9.      Toshiba (Major electronics company in Japan) 3/1

Has shipped over 5 million units of small size disc drives for automobile applications. Toshiba has kept 85% share in this area.

10.  Poly Plastic (Major plastic resin supplier in Japan) 3/2

Will start the volume production of the cyclic polyolephine co-polymer for the optical application such a lenses for the cameras.

11.  Harima Kasei (Soldering equipment and material supplier in Japan) 3/1

Will invest 300 million yens to start the volume production of the solder paste in Eastern Europe.

Interesting literatures about the packaging industry

Articles of DKN Research

1.  "2006 Global Material Projection for Flex Circuit" DKN Research, October, 2006. http://www.dknresearch.com/Products.html

2. "Introduction for the Printed Circuit Boards of Car Electronics, Flexible Circuits", (Japanese only), Dominique Numakura, Nikkan Kogyo Shinbun, June, 2006, 2400 yens.

3. "The latest semiconductor package, Part XXI, Teardown Analysis of FDD, CD Drive", Dominique Numakura, Electronics Packaging Technology, January, 2007 

4. "Five Year Projection of the Global Flexible Circuit Market" Robert Turunen, Dominique Numakura and James J. Hickman, The Board Authority, Volume 7, August, 2006

5. "Technical Trends and Market Projection of the Materials for the Flexible Circuits", (Japanese only) Dominique Numakura, Denshi Zairyo, October, 2006

6. "Leading Edge Material and Application of Polyimide (Materials for the Advance Flexible Circuits)", Dominique Numakura, CMC publication, August, 2006

7. "Business Trends and Technology Trends of the HDI Flexible Circuits -

Roadmap for the Ultra High-Density Advanced Flexible Circuits", Dominique Numakura, KPCA, October 31, 2006

From the Major Industry Magazines

1. "Flex-Based Interconnection Structures for High-Speed Applications", Joseph Fjelstad, CircuiTree, February, 2007.

2. "Organic and Printed Electronics: The Next Big Things?", Daniel Gamota and Jie Zhang, Circuits Assembly, February, 2007.

3. "First Article Inspection: Understanding the Problems", Greg Ross, SMT, February, 2007

4. "The PCB Design Outsource Proposition. Is outsourcing the right solution for your company?", Joseph Zaccari, Printed Circuit Design & Manufacturing, February, 2007.

5. "Fluxless Wafer Bumping by Electron Attachment", Christine Dong, Richard Patrick, Eugene Kawacki and Gregory Arslanian, Advanced Packaging, January/February, 2007

6. "From Chips to Systems via Packaging - A Comparison of IBM's Mainframe Servers", Hubert Harrer, George A. Katopis and Wiren Becker, IEEE Circuits and Systems Magazine, 4th Quarter, 2006

7. "Under the Hood-Latest DESIGN GEMS Unearthed",  presented by EE Times and techonline, December 2006