Panasonic’s recycling credentials will be invaluable to the ANZRP

The news last week that Panasonic Australia MD Steve Rust had been appointed to the board of the Australia and New Zealand Recycling Platform is a huge competitive advantage for that recycler. As the ANZRP competes against DHL and E-Cycle Solutions, and other potential providers, for contracts, Appliance Retailer today presents a special feature on the history of Panasonic and the environmental focus this company already has in its home country.

For clarity, references to ‘Matsushita’ always refer to the Panasonic founder. The company, previously known by several names, is always referred to as ‘Panasonic’.

No one subject has polarised Australians more than our responsibility, or lack thereof, to the environment. Green initiatives have led to the ousting of former Prime Minister Kevin Rudd and his then opponent Malcolm Turnbull.

These falls from grace were the beginning, not the end. Opinion polls predict that current PM Julia Gillard would lose a snap election in a landslide due to her Government’s policy to put a price on carbon. A green conscience can soon turn red with the blood that has been lost.

Despite this controversy and the perceived doubt that exists over human-influenced climate change, Panasonic Australia is wholly committed to the corporation’s global philosophy called ‘Eco Ideas’.

At the core of this movement is an audacious prediction. Just as the 19th Century was marked by changes to manufacturing brought about by the Industrial Revolution, and the 20th Century experienced a technology upheaval, Panasonic’s planning for the remainder of the 21st Century is centred on a Green Revolution.

By the fulfilment of this predicted revolution, Panasonic’s goal is to be known as the “number one green innovator in the electronics industry”.

250 Years of Foresight

To fully appreciate this bold vision, one must look back at the company’s founding in a humble wood-thatched Osakan house-cum-factory. It was 1918 when 23-year-old Konosuke Matsushita started manufacturing light sockets with his wife and brother-in-law. A man ahead of this time, the official history tells that Matsushita traded bicycle manufacturing for electronics when he saw an electric tram as a 15-year-old.

This St Paul style conversion may be romanticised, but what it is not in doubt is Matsushita’s enthusiasm for grand plans. In 1932, he delivered a speech that still resonates with employees and still influences the direction of the company. In this address, Matsushita outlined his 250-year plan for the manufacturer that would eventually become Panasonic.

While many companies struggle to formulate 5- or 10-year plans, Matsushita organised the growth of Panasonic into ten 25-year cycles.

The first of these cycles saw tremendous growth in the company, with the introduction of heaters, irons and radios. Shortly thereafter, Matsushita’s factories were taken over by the Japanese Imperial Government for World War II production and then his management staff was purged by postwar regulations.

Matsushita’s determination to rebuild his company was heavily influenced by his desire to see greater equality in Japanese society. Whatever remnants of Japan’s feudal, class-based system were eliminated by the Allied reconstruction, and the westernisation of Japan was the fountainhead for the economic boom that would follow. This greater spread of wealth made it possible for Matsushita to more widely realise his company goals.

“The state of exhilaration that comes from bringing joy to the customer is everywhere to be found,” he said. “That is why I think it essential to engage in business and run a company with an eye towards bringing happiness to your customers.”

Matsushita also encouraged his staff to find ways of making electronic appliances more affordable. When television services started in Japan, a 17-inch black and white TV cost more than 20 times that of a standard salary. This was not acceptable for Matsushita.

“I don’t care if you do it by working harder and earning more money, or by using your own ingenuity — whatever it takes — develop a TV that you yourselves can afford,” instructed Matsushita, who would be able to release a TV at one-quarter the cost within three years.

This drive to engineer change was a key component of Panasonic’s growth from small town manufacturer to global Tier 1 electronics supplier. Now into the fourth of Panasonic’s 25-year cycles, the company is confronting the Green Revolution, amongst other new challenges.

Cycling and Recycling

One of Panasonic’s first products was battery-powered bicycle light released in 1923. It was a complete failure. Instead of changing the product, Matsushita changed his strategy. He gave away free samples to traders and dealers so they could demonstrate the light to potential customers. This proved a huge success. Almost as an aside, the light was a perfectly good product for its time.

The strategy of the last 100 years has been to make new products, market them and sell them, to replace the old products. Little thought was ever given to what became of the old products. In Australia, our front lawns have long been the final resting place for our once-loved TV or washing machine or fridge. But we were wrong — the final resting place for these appliances was actually landfill.

Japan is the geo-political opposite of Australia: it’s a small country with a big population. The problem of ‘landfull’ has already arrived, and the Japanese Government has acted, implementing new laws mandating compulsory recycling on four product categories: TVs, laundry, refrigeration and air conditioners.

At the Panasonic Eco Technology Centre (PETEC) in Kato City, one hour’s drive south of Osaka, these TVs and appliances are crushed and separated into scrap metal, plastics and other waste, with these materials then on-sold for future use.

Click here to see an image gallery from PETEC

Interestingly, this is not an act of environmental charity for Panasonic, with PETEC running at a profit. Revenues are generated by a levy on recycling and income from the sale of parts. This profit is then reinvested into research and development, rather than being distributed to shareholders.

Of even more interest is this levy. Unlike in Australia, where manufacturers and importers are expected to pay for recycling, it’s the consumers funding the scheme in Japan. According to PETEC president Kazayuki Tomita, current rates for TV recycling are around AU $22 for a small TV and AU $28 for a large TV.

Although this model appears to work in Japan, the industry body charged with implementing a recycling scheme in Australia, Product Stewardship Australia (PSA, which has since ‘transitioned’ into the ANZRP) has no plans to charge consumers. The Gillard Government act legislating the TV and PC recycling scheme, passed on 22 June 2011, all but guarantees that both retailers and consumers will not bear any cost for this process.

“The first sectors to drive this new age of action on product take-back and recycling are the TV and ICT industries,” said a PSA spokesperson shortly after the bill was passed. “With funding and implementation to come from TV and computer manufacturers and suppliers, Australia is poised to benefit from an industry-led collection, recycling and community education initiative.”

Panasonic is an active member of PSA, along with Sony, Samsung, Sharp, Sanyo, LG, Hisense, TEAC, Philips, JVC, Toshiba and Bush. Although this is a sizable representation of the TV industry, there are still many TV brands and importers not involved.

An Environmental Dilemma

In game theory, there’s a scenario called The Volunteer’s Dilemma. Imagine if an apartment building suffered a blackout. If only one resident called and paid for an electrician to visit, everyone in the apartment will get their power back. But if none of the residents call an electrician, none of them will get their electricity switched on.

The propensity for residents to do nothing — to assume that someone else will bear the cost — is natural. This leads to what’s known as ‘freeriding’.

The compulsion for freeriding in the recycling dilemma is enormous. If you’re running a business charged with making money for your stakeholders, it is a big step to invest money in a voluntary scheme that may or may not be effective.

Two years ago, Panasonic Australia managing director Steve Rust hit out at freeriders, telling Appliance Retailer that a tax on importing TVs must be industry-wide and must apply to each and every TV brought into the country.

The use of ‘freeriders’ as an epithet was thrown about by PSA executive director John Gertsakis and by Sony national technology services manager Stuart Clark. Explaining the counter view at that time was ViewSonic country manager William Tse.

“Existing PSA members are conglomerates that have large operations in Australia,” Tse said. “ViewSonic is a global company, however with a small business set up locally compared with PSA member companies.

“Becoming a member of PSA at this point in time would not be beneficial or economically viable for ViewSonic. PSA membership is not compulsory and without legislation in place, members are effectively lobbyists.”

Effectively lobbyists? Maybe.

Effective lobbyists? Definitely. The conflict between PSA members and the so-called ‘freeriders’ may have stalled progress, but it did not stop it. Under the Product Stewardship Bill 2011, “no supplier of new TVs and computer equipment can avoid their collection and recycling obligations”.

In his role as Panasonic managing director, Rust was living Panasonic’s global green vision. This longterm involvement in PSA would soon become an important backbone in Panasonic Australia’s efforts to market and sell products, rather than simply recycle them.

Green Washing and Drying

Panasonic Australia’s consumer products revenue over the last decade has been focused squarely on its successful and popular Viera-brand plasma TVs and Lumix-brand digital cameras. With price erosion affecting both of these categories, Panasonic is now beginning to market products in new categories, such as air conditioning, irons, refrigeration and laundry.

As part of its market proposition, Panasonic will be heavily promoting the green features of its new appliance ranges. This strategy proved effective last summer, when Panasonic launched an air conditioning range with an ‘eco patrol sensor’ to monitor how many people were in the room and adjust temperatures accordingly.

When a large corporation sells its products along green lines it runs a big risk. The media and consumers are very sceptical of big companies talking up the environment while actually doing very little to improve it. It’s a practice called ‘greenwashing’, and it has led to enormous public backlashes.

One such example was BP, which rebranded itself Beyond Petroleum and stylised its logo in green and yellow in a worldwide marketing campaign. The British company was then responsible for the Deepwater Horizon catastrophe, the largest accidental marine oil spill in history. The result was widespread ridicule, abandonment of public trust and an estimated total cost of $40 billion.

Panasonic is on safer ground. At the very least, its commitment to environmental efficiencies is genuine. At a presentation in Osaka by Panasonic environmental planning group manager Rui Nakao, the five key tenets of the global “Green Plan 2018” were outlined.

These objectives were to reduce CO2 emissions, improve the recycling of resources, reduce water consumption, minimise the environmental impact of chemical substances, and identify the impact of operations on biodiversity and exercise harm minimisation.

“We have made the environment central to all our business activities and we’re bringing forth innovation,” said Nakao. “The world is at a significant turning point.”

In an architectural expression of this initiative, Panasonic has built a paragon of environmental living at its Eco Ideas House in Tokyo. Features of this house include improved sunlight penetration; LED lighting; a top-loading, tilted-drum washer/dryer; a heat pump to reduce power consumption; and a solar power generation system on the roof. One practical innovation is a sit-down shower, which claims to reduce water consumption by 85 per cent.

Home Truths

In Australia, Panasonic has endowed a professorship at Macquarie University to former Australian of the Year and climate change crusader Tim Flannery. When he’s not discovering new species of kangaroos, Flannery works to educate those who’ll listen on how the earth is changing and what humans can do to arrest these inconvenient truths.

This association with Macquarie University is worth almost $700,000 over three years, with the funding earmarked for environmental research and public education.

The first research project undertaken with this grant was a study into consumers’ perceptions about eco-conscious electronics and appliances. More than three-quarters of the 2,000 respondents said they were aware of and concerned by environmental issues, while more than 90 per cent agreed that their own actions can make a difference.

Encouragingly for a company releasing an eco range of appliances, this research found that almost 90 per cent of respondents had a positive perception of the performance of appliances with environmental features. The final report noted that past research found that consumers considered eco-friendly appliances to have inferior performance.

Konosuke Matsushita’s philosophy was highlighted by a willingness to remain open to new ideas. He described this as having an “untrapped mind”.

“The untrapped mind is open enough to many possibilities,” he said, “Humble enough to learn from anyone and anything, forbearing enough to forgive all, perceptive enough to see things as they really are, and reasonable enough to judge their true value.”

Panasonic clearly has more than an open mind on the divisive climate change issue. Regardless of the truth quotient of both sides’ claims, it is pushing on with its environmental objectives, maintaining its volunteer position in the appliances game.

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