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Matsushita to Halve Overseas Production
Aug 17, 2006
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In the next 5 years, Japan's Matsushita Electric Industrial Co. plans to halve the number of its overseas production sites in order to boost profitability, according to the Nihon Keizai business daily.

Currently the Panasonic brand maker has about 170 production sites abroad, and plans to shut down those showing poor financial performance in a bid to raise its operating profit margin to 10 percent in the year starting April 2010, double this year's projected margin of 5 percent, the paper said.

A company spokesman said Matsushita had no specific plans to cut half of its sites.

Matsushita President Fumio Ohtsubo has said Matsushita would seek growth by boosting overseas sales and aggressive cost cuts. Its overseas sales accounted for 48 percent of its group revenues of 8.9 trillion yen (approx. U.S. $76.3 billion) in the last business year.

The company will close or consolidate some 130 manufacturing units, and 40 factories that have not made a positive return on investment in 8 years, or have posted declining sales, a negative net cash balance, operating profit margins of less than 3 percent or capital costs in excess of operating profits for three straight years, the paper said.

According to the paper, these criteria will apply to many small and inefficient production sites in Southeast Asia, and the shutdowns will enable Matsushita to concentrate more funds in Brazil, Russia, India, and China.

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