Fate of Panasonic factory undecided

European production could move to the Czech Republic

Matsushita, the Japanese maker of Panasonic-branded cell phones, has denied it has decided to close its last UK production plant that employs 450 workers.

"We are in talks with representatives of the production plant workers on business strategies, but nothing has been decided on closing that factory," a Matsushita spokesman said.

The Japanese business paper Nihon Keizai Shimbun reported Matsushita was considering closing the Berkshire production plant and shifting European cell phone production to the Czech Republic.

The company has already decided to close a packing facility next March by merging its two factories in the UK, a company spokesman said without giving employee numbers for the two facilities.

Matsushita is restructuring it operations in the UK because of falling demand for mobile phones in Europe.

European strategy

The newspaper said Matsushita Industrial Communications (UK), which is 56.3% owned by parent Matsushita Electric Industrial, plans to consolidate its European operations in the Czech Republic in April, targeting annual capacity of 20 million units.

The shift would boost its capacity level from an annual 10 million units in the UK and slash labour costs, the paper said.

Falling demand for cell phones in Europe and the high tech slowdown caused an operating loss of 3.2bn yen (£20m, $26.1m) at Matsushita (UK) for the business year that ended in March.

The factories in Britain handle the final manufacturing operations in cell phone production and packing.