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A Moving Experience

Photography by Daryl Stone

A Moving Experience

For Newark’s newest corporate arrival, nemawashi is the name of the game

By Michael L. Diamond
Photography by Daryl Stone

With an eye on a new North American headquarters, Panasonic considered all of the factors corporations use to make these kinds of decisions—financial, quality of life, adherence to company mission statements—and settled on Newark.

Now came the hard part: convincing its 1,000 employees it was the right move.

“In the beginning I was worried about [the possibility], would we lose people who would say, ‘I just don’t want to come to Newark,’” Michael Riccio, Panasonic North America’s chief financial officer, says. “But I think we did enough—what’s the word I’m looking for? I know it in Japanese. Nemawashi.”

Panasonic moved to Newark from its suburban campus in Secaucus in the summer of 2013, breathing new life into the city and setting the stage for more apartments, stores and maybe other corporations that, in a post-Great Recession age, want to be in cities.

Now, Newark needs Panasonic to thrive, which is no small task, given how fast technology is changing. No small task, given Panasonic’s commitment to nemawashi, the type of consensus building that assured its move to Newark would be no problem at all, but could be a roadblock for a huge company, approaching 100 years old, that needs to fend off competitors

“The kinds of decisions they produce are better decisions, but when you have the technology world, which is evolving by the month…you may have effective decisions that may be slow and behind the curve,” says Farok Contractor, professor of international business and global strategy at Rutgers Business School in Newark and New Brunswick.

Panasonic, based in Osaka, Japan, makes television sets and hair dryers, unbreakable laptops and audio systems for cars. It makes facial scrubbers and seatback video displays for airplanes, data storage systems and a self-sustaining village in Japan that is powered by Panasonic solar panels and batteries.

Visitors to the Newark office may run into a Tesla, the electric car for which Panasonic is developing a battery that allows it to travel 265 miles on a charge. (Employees here get to take it home for a spin).

And they can’t miss the innovation center on the first floor, showing off the company’s latest research. Warning to car salesmen everywhere: There is a product that allows consumers to buy a vehicle at a dealership using a touch screen, the same way they order hoagies at Wawa.)

“I’m not really a techie, but it’s just amazing,” says Shannon Horvath, senior marketing manager who started at Panasonic as an administrative assistant 24 years ago, when people still used typewriters. “It’s made our life so much easier.”

For cities trying to jump-start their economies, it helps to have a company that adheres to an age-old mission statement that is never far from employees’ minds.

For Panasonic, it is Seven Principles developed by its founder Konosuke Matsushita, the first of which is “contribution to society.” (The others are fairness and honesty; cooperation and team spirit; untiring effort for improvement; courtesy and humility; adaptability; and gratitude.)

Riccio says the company turned to them when its lease in Secaucus was set to expire.

The company began searching for a new site in 2010, starting with a list of 40 locations, including other Panasonic sites like those near Chicago, San Diego and Atlanta.

But the Newark property, which had been owned by Matrix Development Group since 2001, stood out. Employees could use mass transit, since it was a brief walk from Penn Station. And it would help Panasonic accomplish its goal of being a leader in sustainability by its 100th anniversary.

The 12-story building cost $190 million to develop, according to the New Jersey Economic Development Authority, which approved tax credits potentially worth $102.4 million.

Aside from top executives, no one has a private office, making it easier to collaborate. Sunlight streams in. Employees looking east have a direct view of the Manhattan skyline. The company has cut its utility bills by 50 percent.

“I think Panasonic is a great catalyst for us and the city,” says Richard Johnson, senior vice president of Matrix, which is planning to build housing, a hotel and offices on six acres along the Passaic River in Newark.

As employees settle into their new office space, though, pressure is mounting.

Panasonic reported a loss of $7.5 billion in fiscal 2013 when it launched a restructuring plan. It exited products such as smart phones for consumers and plasma display panels. And its products like cameras have been under fire from Apple’s iPhones.

The company returned to profitability in fiscal 2014, but Francis McInerney, a consultant who follows Panasonic closely, says the company hasn’t kept up with the changing technology landscape, where information—and all the power that comes with it—is stored in a cloud.

Panasonic, for example, can make money selling solar panels, but it misses out on the revenue that could come with, say, a product that helps consumers manage their climate from their smart phone.

As a result, its sales in the United States and Europe fall short of its sales in Japan, McInerney says.

“If Panasonic could succeed here as well as it does in Japan, New Jersey would be one very happy state,” McInerney, managing director of North River Ventures LLC in New York, says. “But its underperformance is so chronic, the question is, what’s going to bring it back?”

That’s the task given employees here, and they don’t need to look far for inspiration. Each floor in the new building is dedicated to a famous inventor.

Sitting on the 12th floor, in one of the few offices, Riccio says that after Panasonic chose Newark, it put its commitment to nemwashi into action.

It arranged for bus trips to Newark so that employees could learn about the city. And it invited the Newark Police Department to meet with employees to dispel the notion that crime here is worse than any other big city.

Riccio is pleased with the move. Panasonic can easily tap into talent from Rutgers, the New Jersey Institute of Technology, and even New York City, which is just a 20-minute train ride away.

And employees have increasingly ditched their cars. The percentage taking mass transit to work has increased from 5 percent in Secaucus to 57 percent in Newark—a figure Riccio wants to reach 80 percent.

The hope: They will step off the train, make the short walk to the office, team up to build dazzling products and help turn Newark—and Panasonic—around.

INNOVATION CENTER

If Panasonic really wanted to blow us away, it would show off the LED display that it made for the Texas Motor Speedway right here in its innovation center on the first floor of its new Newark headquarters. Shannon Horvath, Panasonic North America’s senior marketing manager, is telling me about it. It’s 218-feet wide by 95-feet-tall. And a little more research finds that it’s called “Big Hoss TV.”

Looking around the innovation center, it’s just not going to work. The ceilings, for one, aren’t high enough. But you can get a glimpse of what Panasonic is up to—along with how far it has come and how far it still has to go. And you can see just what a tall task it is, trying to invent products that consumers don’t know they need until they see them.

The innovation center blends the old and the new. It makes note of Panasonic’s benchmark inventions – the attachment plug for light sockets created in 1918; the double cluster socket in 1920; the square battery-powered light in 1927.

So very quaint.

Nearly 100 years later, it takes a lot more to impress. Like the video cam on display here that you can mount on your helmet so that you can enables passengers to watch live TV, and the sound system it sells to automakers that lets motorists hear music that approaches a live performance. (In 1918, folks probably would have been content simply to fly and drive).

Other Panasonic products are too big to fit in the innovation center. Forget the giant screens for sports stadiums. There is a diagram here of an entire town being built in Japan that will be powered by Panasonic.

My favorite item? The Panasonic massage chair with multi-directional rollers that turns it into a personal masseuse. It sells for about $8,000. I didn’t realize it until just then, but I really need that chair. —M.D.