Japan's Panasonic plans fridge factory in Europe
LONDON (Reuters) - Japanese electronics group Panasonic (6752.T) plans to open a European factory this year to make home appliances, a market it is targeting as sales of televisions stagnate, in a rare vote of confidence for manufacturing in the crisis-hit euro zone.
Panasonic is looking to minimize the effect of a strong yen on its exports by bringing manufacturing closer to its customers, and also hopes to capitalize on any incentives that struggling euro zone governments may offer.
Industrial production in the euro zone fell 0.3 percent month on month in March, as an escalating debt crisis, rising unemployment and high inflation dissuaded consumers from spending and companies from investing.
"We are studying European production," Panasonic's European Chief Executive Laurent Abadie told Reuters in an interview. "We have different interesting opportunities at the moment. Probably I will be able to give you more information in a few weeks."
"This year, yes, this is our target."
Abadie declined to say which locations were under consideration, but said it would be a European Union country.
Chinese automaker Great Wall Motor (2333.HK)(601633.SS) opened its first European factory in Bulgaria in February, as part of its strategy to lift sales in the region.
Panasonic - known for its Viera TVs and Lumix cameras - currently manufactures home appliances such as refrigerators and washing machines in China, Turkey and other parts of Asia.
The company concentrates on high-end appliances - for example, it uses aeronautics technology in its refrigerators that can cost up to $2,000, for better insulation and to save space.
It has just 0.5 percent of the European market for washers and fridges but aims to increase that proportion to 5 percent by 2018 as it bets on home appliances, solar panels and batteries to boost profits.
The company, one of Japan's best-known brands, reported a record annual loss earlier this month as sales of TVs, cameras and recorders slumped. It has promised a return to profit this year under a turnaround plan and new president.
Panasonic estimates that total European demand for washing machines is about 18 million annually, and for refrigerators about 19 million.
Abadie said that producing home appliances close to the consumer was good not only for supply-chain management but also because of cultural differences that meant appliances were not global products in the way that, say, televisions were.
"The behavior of the consumer is very different country by country," he said. "Your kitchen and a German kitchen or the Italian kitchen are quite different. The way you manage the food, or prepare the food, is incredibly different."
He cited sushi compartments in Japanese fridges, space for cosmetics that would otherwise melt in fridges in other parts of Asia, or milk compartments in British fridges as examples.
"Panasonic has been very much a Japan-centric company in the past, that was our main market. Panasonic in Japan is a kind of institution," Abadie said. "The clear direction today is Panasonic is a global company." ($1 = 0.6328 British pounds)
(Reporting by Georgina Prodhan; Editing by Erica Billingham)
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