Panasonic to shut down part of Malaysian operations, hundreds to be jobless

Commuters on the Federal Highway, especially on the Shah Alam stretch, would find it hard to miss Panasonic Malaysia’s iconic factory along the expressway. 

Established in 1965 as Matsushita Electric Company Malaysia Bhd and renamed Panasonic Manufacturing Malaysia Bhd (PMMA) in 2005, the Japanese firm employed more than 2,000 in multiple plants across Malaysia at its peak at the turn of the century.

However, the tides appear to be turning for the manufacturing giant. It is believed its manufacturing plants in Malaysia are soon to be shuttered, leaving hundreds of workers jobless, Malaysiakini has learnt.

This comes after PMMA last year lost two separate lawsuits alleging that its former suppliers, executive director Chen Ah Huat and employees, defrauded it of millions of ringgit in payment for work that could not be verified as being delivered.

A source privy to the matter divulged that PMMA’s then-executive director Chen was made to leave in 2013, and subsequently 15 managers were also terminated.

The company also launched a zero-corruption framework emphasising transparency, integrity and whistleblowing.

Months after it lost the lawsuit, PMMA shut down its kitchen appliances manufacturing operations in its SA1 plant, located at Section 15, Shah Alam, on March 17, affecting 75 local workers.

Sixty of those workers left on the mutual separation scheme (MSS) while 15 others were moved to other departments.

However, in its annual report, PMMA did not link the closures to the lawsuits, instead chalking it up to the realignment of global production by Panasonic Group.

The company also cited rising labour costs and said it aims to continue adopting automation to reach “Smart Factory” status in 2030.

Over the past five years, the company laid off 689 local workers, including outsourced and temporary workers, and sent home 392 migrant workers, but also created 63 new jobs for locals in 2020, according to company reports.

More closures to come

The SA1 plant shutdown will not be the last this year, with a Malacca plant in the Panasonic group - Panasonic Appliances Refrigeration Devices Malaysia Sdn Bhd - believed to be closed by the year-end, Malaysiakini learnt.

The plant, established in December 1992, will be relocating to China, while 500 locals and 95 foreign workers in Malaysia will be retrenched, a company source said. 

It is also learnt that Panasonic AVC Networks Johor Malaysia Sdn Bhd was also making arrangements for closure before the year comes to an end, but it is unclear how many workers will be affected.

During a recent PMMA staff assembly, Kenji Kamada, the managing director who was instrumental in PMMA’s restructuring, announced his transition to Panasonic Appliances Air Conditioning (M) Sdn Bhd effective June 1.

Some employees fear this would mean Panasonic Appliances Air Conditioning, which employs 6,000 people, may also undergo a restructuring.

PMMA, which is public-listed, had in 2022, also relocated its rice cooker manufacturing department at the SA1 plant to India, retrenching 150 Malaysians.

“Operations (at SA1) are running at a minimum," the source said.

In contrast, in 2005, the group’s revenue from Malaysia alone stood at more than RM342 million, eclipsing revenue from other operations in China, the Middle East and other parts of Asia combined. 

Today, Malaysia's contribution to the group's revenue is RM306 million, trailing the accumulated rest of Asia's revenue by 2.69 percent. 

Over at the SA2 plant, located at Section 23, Shah Alam, the electric irons department was running at a loss and was scheduled to cease operations at the end of this year.

“The electric iron products have not been profitable. The closure will be affecting less than 200 workers,” the source said.

There are also fears among workers in departments making other appliances that their jobs are also at risk because, over the years, manufacturing for 11 products has been moved from SA1 and SA2 to other Asian countries.

Drop in production, pay packets slimmer

It is learnt the fans department is also facing a bleak future, with forecast manufacturing plans showing production more than halved from 350,000 per month last year to around 110,000 units a month now.

The drastic dip, however, does not reflect the slight 0.5 percent decline in global demand for Panasonic Ecological System (PES) products, which includes fans, according to the source.

The cut in production has affected workers' monthly take-home packet by 40 percent, with workers losing out on overtime income. 

Previously, workers would be clocking in up to four hours of overtime each day to keep up with demand, but this year, they’re clocking out by 5pm daily, the source said. 

Panasonic says workers treated fairly

Speaking to Malaysiakini, a spokesperson for PMMA confirmed the closure of two product manufacturing departments at the SA1 plant, calling it a “rationalisation exercise and business restructuring”. The process, he said, was completed on March 31.

However, he refused to disclose the exact number of employees who were affected by the retrenchment, future plans for closures or if the shutdowns will affect consumer warranties on Panasonic products.

He said the employees who opted for the mutual separation scheme (MSS) were given fair and equitable compensation packages, which he said were deemed to be above industry norms. 

“For the remaining number of employees who did not opt for the MSS, our human resource department provided them with an offer to be transferred to other relevant departments within PMMA, in positions that suit their skill sets and potential for growth.”

The spokesperson also clarified that PMMA’s lawsuits against its former vendors and staffers were not related to the retrenchments.

“We would also like to inform you that the court cases have been successfully resolved.”

When contacted, the Labour Department said it cannot publicly disclose the number of workers retrenched or would be retrenched from the Panasonic group.

Union in the dark

While PMMA believes the retrenchments were above board, union representatives said they were kept in the dark on some matters, even after some employees completed their last shift in March.

Electrical Industry Workers’ Union (EIWU) secretary-general Zaimi Muhammad Yusof was also surprised to learn members were offered separation packages and said he was unaware of the department closures. 

Although the company is not obligated to inform the union about plans for mutually agreed termination of employment, Zaimi said EIWU wants to be in the loop to ensure members who refuse the packages are not penalised. 

“Our members who didn’t accept the separation scheme may be assigned to positions below their current grade. 

“If they are placed in jobs above their grade, they would need to receive an additional allowance known as acting allowances,” he said. 

Reskilling at Malacca plant

Meanwhile, Zaimi confirmed that Panasonic Appliances Refrigeration Devices Malaysia Sdn Bhd informed the union it will close operations in Malacca on Dec 31, laying off 590 union members. The factory will move to China. 

The members will receive retrenchment payouts of 1 to 1.75 times their basic monthly salary multiplied by their years of service, he said.

Zaimi added that the company has also offered to provide retraining for long-term employees who may have trouble seeking other employment. 

“The company has informed the union well in advance about the termination of employment through retrenchment, even though they are only required to give one month’s notice. 

“They have confirmed that they will adhere to the terms in the collective agreement with the union.

“Additionally, they have promised to explore the possibility of extending the employment of one employee who is retiring before December, which will allow him to receive the retrenchment benefits as well,” said Zaimi. - Mkini