Panasonic to Trash Expansion Plans at Japanese Plant

Panasonic (NYSE:PC) has scrapped a plan to expand a lithium ion battery plant in Osaka, Japan as part of its ongoing effort to shift operations to China amid cost and price pressures, according to a report by Reuters, citing a person with direct knowledge of the matter.

The Japanese consumer electronics maker has reportedly stopped production of batteries at its Sumoto plant in the country and dropped expansion plans at its Suminoe plant in Osaka, which opened for operation last year.

The company plans to produce half its lithium ion batteries for electronic devices in China by the fiscal year starting April 2015, from just 10% to 20% currently, according to the Nikkei newspaper in Japan.

In shifting production overseas, Panasonic will be cutting back on its domestic operations at a time when the industry sector on the island nation continues to thin out as companies flee the strong yen and ongoing effects of the devastating March 11 earthquake, tsunami and subsequent nuclear crisis.

Excluding Sumoto, Panasonic has a total of four lithium ion plants in Japan. It is slated to complete construction of its third Chinese factory in 2012.