August 6, 2011: As per the latest news, Hitachi Ltd announced that the company is planning to shut down its television production in the home country. The company believes that it is better for them to outsource television production given the risky market conditions they are in now.
Japanese firms are knows for best quality manufacturing practice and this move from Hitachi is against this long lasting tradition of Japanese industry.
Hitachi Limited has already started outsourcing it television production, particularly to firms in Taiwan. The company is also focusing to extend the outsourcing to many other countries. The authorities of the company said on Wednesday that employees in the production plant at Gifu unit will not be affected by this decision. The job security of the employees will be ensured by Hitachi Limited. The authorities said that the employees will only have to shift their job to the production of components of television. The assembly of the television set will be done at the outsourced countries.
Hitachi was one of the pioneers in television manufacturing sector and has established a good position in the global market. Increasing competition has affected the performance of the company very badly. The company is trading at a very lower price in the market because of the eroding market share.
Comparatively the company has made very less business form the previous year. Even though the trend in television market is fluctuating and risky, Hitachi managed to sell 25.5 million units in the previous year. According to the survey the company is however expecting much lesser sales, which will be only 7 million units by the end of 2012.
The outsourcing strategy taken by the company is to increase the sales per unit. According to the survey conducted by the survey team of Hitachi, the company is expecting to maintain a balance in the sales and put an end to the decrease in sales of Hitachi televisions with this strategy of outsourcing.
It is not only Hitachi, which is suffering from decrease in demand and increase in competition in this particular sector. Companies such as Panasonic are also struggling to retain its market share. These players cannot withstand high competition from Samsung Electronics and other Asian players. Outsourcing in TV production and assembling seems to be a strategy for the taking, at least for most of these ailing giants.