Konosuke Matsushita exits with Chairman Arataro Takahashi and President Masaharu Matsushita after announcing his retirement from active service.
In July 1973, on the company's 55th anniversary, Konosuke Matsushita retired from active service, taking the position of executive adviser. He announced that the company would be run under the management of Arataro Takahashi, the new chairman, and President Masaharu Matsushita. To commemorate this event, the company made donations to social welfare projects in each prefecture of Japan, totaling ¥5 billion. Takahashi had joined the company in 1936, at the time of its incorporation. In the post of accounting director, he had put his stamp on the company's financial management system, which he helped set up to modernize its operations, an urgent need at the time. Takahashi had accumulated a long record of achievements, including successful negotiations with Philips for the Technical Cooperation Agreement, setting the foundation for Kyushu Matsushita Electric, promoting overseas business operations, and organizing the company's personnel and general administration. But more than anything else, he was someone who represented the full depth of the Panasonic spiritual tradition.
In August 1971, U.S. President Richard Nixon rocked world financial markets with the announcement of emergency measures to shore up the U.S. dollar. In Japan, currency exchange rates were allowed to fluctuate. However, in December, a 10-nation financial summit restored fixed exchange rates, setting the yen at ¥308 per U.S. dollar. This was abandoned in February 1973 due to the sustained rise of the Japanese trade surplus, and the yen rapidly revalued.
Despite efforts to bolster its economic health by rationalizing production and developing attractive new products, the high yen left Panasonic with reduced profits at the end of 1971, and only a slight increase in sales.
In October 1973, the Yom Kippur War broke out, and Middle Eastern oil producing nations reduced their output. Shortages ensued and crude oil prices quadrupled almost overnight, sapping investor confidence and triggering price increases in almost every commodity. World consumer demand plummeted. Economic growth slowed to a crawl as much of the world faced the triple problems of price inflation, recession and international trade deficit.
The Japanese economy was quickly gripped by confusion.
Prices spiraled and, stirred by rumors of shortages, people hoarded daily necessities. Managerial steps to lower costs by rationalizing production failed to cover the rising cost of raw materials, and the company was forced to raise the prices of many products. The electrical appliance market failed to recover its original demand, causing several companies to announce layoffs and shortened working hours. The Japanese economy showed an international trade deficit, and the GNP shrank for the first time since 1945. Matsushita Electric saw increased sales and lower profit in 1974, and 1975 ended with a drop in both sales and profit.
Oil crisis makes the headlines of Japanese newspapers.