Panasonic Corporation of North America is staying in New Jersey, moving its headquarters from Secaucus to Newark. Chairman and CEO Joe Taylor told NJ Today Managing Editor Mike Schneider that the company would have left the Garden State if not for tax incentives. But he also said he wanted Panasonic to stay to maintain jobs in the state and have the opportunity to build an environmentally friendly facility.
Taylor has made headlines recently for saying the United States has become less attractive for manufacturers, a trend he said has been happening for more than a decade. He said in the late 1980s and early 1990s there were 24 manufacturing sites in North America and 80 percent have closed.
“There’s not one simple answer for it,” he said. “A lot of it is global competition but I think the answer that most people are looking for … as it relates to the United States is that it has become a very difficult country to invest in.”
While Taylor said the lower cost of labor overseas is a driving factor for companies to take their operations elsewhere, the cost of the manufacturing process itself is another issue.
The tax structure could be another factor. “When Japan lowered their corporate tax rate earlier this year, the United States became the highest corporate tax rate in the developed world. That doesn’t make any sense,” Taylor said. “Five years ago, the United States attracted 40 percent of all foreign direct investment. Last year it attracted 17 percent of all foreign direct investment.”
Currency isn’t a major factor, according to Taylor. He said the foreign exchanges rise and fall worldwide, shifting and giving the advantage to different countries. As a U.S. subsidiary of a foreign country, Taylor said Panasonic North America has other disadvantages. “The political structure is one thing but the policy structure is something else and the two have now intersected and created a great deal of uncertainty in the business world,” he said.
Taylor admitted it was not an easy decision to keep operations in New Jersey. Panasonic had facilities in Georgia, Illinois and California in addition to New Jersey. He said conventional wisdom for Japanese companies would have operations move to California, but there were other factors. “We have 1,000 people in our headquarters. If I move to Georgia or California, we’re not going to take 1,000 people with us. But those are good employees,” he said. “So I didn’t want to lose employees.”
A tax credit from the state helped and Taylor said without it, the headquarters wouldn’t be staying in New Jersey. Even with the tax credits, he said it wasn’t the best move from a financial standpoint. “But I thought we could do several things. One, we could keep the jobs in the state,” he said. “Two, we want to be the world’s number one green innovation electronics company in the world by our 100th anniversary which is only a few years from now.”
Taylor said Panasonic has a major solar initiative and he wanted to build a sustainable building that allowed employees to take mass transit to work. “So as we went further along, Newark became a more possible opportunity for us and then as you know, we have a very persuasive governor and we have a rather persuasive mayor in Newark,” he said. “And then with their economic development teams we were able to work together and put a package that was somewhat reasonable and we were able to stay in the state of New Jersey.”
Taylor expects to maintain the same level of jobs in the immediate future, possibly hiring a few more people. But he expects the company to grow over the next 10 years.
The news isn’t all good for the electronics company, however. Moody’s downgraded Panasonic stock. Taylor admitted that globally, the company has struggled, but he believes the North American division has turned the corner and is strong.
“We’re growing in North America year over year, almost double digit,” Taylor said. “So I’m confident in North America and I’m very, very confident that we’ll turn it around globally as well.”