As war broke out between Japan and China in 1937, the militarization of Japan's economy intensified. Fearing that these changes would compromise the company's principles, Konosuke issued a series of directives clarifying his management philosophy. Then, in January of 1940, Konosuke gave his first management address, calling for a company-wide effort to maintain product quality, which had been affected by wartime material shortages.
With the start of the War in the Pacific in 1941, the company was pressured to accept to military contracts, which led to the establishment of the Matsushita Shipbuilding Company in 1943, followed by the Matsushita Airplane Company.
Finally, the war that cost Japan one quarter of its national assets came to an end. Panasonic had lost 32 factories and offices, mainly in Tokyo and Osaka. Miraculously, the Head Office and main factory were spared, but the company would virtually have to be rebuilt itself from scratch.