Panasonic Corp. (PC) plans to restructure its division, Motor Company in April 2010 to enhance growth potential and strengthen its management structure. Upon completion of the restructuring, the motor company will be dissolved.

Panasonic will reorganize and integrate its Home Appliance, Automotive Motor and Industrial Motor Businesses to form the Home Appliances Company [HA] and transfer the Information Equipment Motor Business to Minebea Motor Manufacturing Corporation.

The company will liquidate Panasonic Motor Matsusaka Co., Ltd., which is Panasonic’s subsidiary company, for accelerating manufacturing at other optimal locations after transferring compact AC geared motors and industrial brushless motors to Panasonic Motor (Zhuhai).

Panasonic’s organizational restructuring and its ability to target resources to growth areas have enabled the company to withstand the weak economy. The company aims to strengthen both finished product manufacture and device businesses through company-wide cost reduction efforts Incorporatedluding material costs and fixed costs.

The company has experienced losses in 2009 due to the global economic slowdown, weak consumer spending and slump in electronics sales. To cope with the global slowdown, Panasonic plans to close and integrate 27 manufacturing sites Incorporatedluding 13 in Japan and 14 overseas as part of its restructuring plan. The company also plans to retrench 15,000 employees in Japan , by the end of March 2010.

The tough business environment, global recession and shrinking demand triggered by the financial crisis and changes in market structure have led the company to come out with various restructuring plans.

In fiscal 2010, the company plans to further strengthen its earnings in growing businesses, reform or withdraw its unprofitable businesses, expand its lines of business and accelerate new restructuring initiatives. As a result, the company expects 100.0 billion yen in cost reductions in fiscal 2010.

Panasonic is a leading manufacturer of electronic and electrical products, systems and components for a wide range of consumer, business and industrial uses. Yet, the company faces competition from other large players such as Sony Corp. (SNE) and Hitachi (HIT). Competition also emanates from large international companies such as those in South Korea.

We have a Neutral rating on the stock.

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