Electronics giant Panasonic has pulled the plug on a $13-million wireless design centre in Calgary, axing more than 40 jobs and leaving local business officials – who promoted the centre as a jewel in the city’s wireless community – licking their wounds.

“They are folding their tent and moving back to Georgia,” says building developer Randy Remington of Remington Development Corp., owner of the three-storey, 76,000-sq.-ft. building at 8 Street and 72 Avenue N.E.

Mike Wuerstl, director of Calgary operations for Panasonic who resigned in early January, says he once had high hopes for the promising technology the company was developing at the new centre.

“It’s such a shame,” he says. “I’m disappointed because the opportunity was there for Calgary and for me and my team.”

Lisa Dempster, Business Edge
Operations chief Mike Wuerstl, Remington president Larry Mason and Panasonic VP Salah Jarrad at Calgary sod turning.

Senior staff at the company are now working their contacts to find employment for the junior engineers – many of whom moved to Calgary to take a job with Panasonic. “It’s expertise I really don’t want Calgary to lose,” adds Wuerstl.

Company officials declined to comment in detail before Business Edge deadlines. However, Nancy Geraghty, vice-president of human resources for Panasonic, said in a brief interview from the company’s U.S. headquarters in Georgia that she and another executive would fly up to Calgary on Monday to meet with affected employees.

“Right now, we’re up to our eyeballs in making sure our employees are being taken care of,” Geraghty said.

“That’s good of her,” retorted one worker at Panasonic.

The worker, who asked not to be named, said frustration had been mounting among Calgary employees, with often-mixed signals being received from head office.

“What our design centre was originally opened up for, it wasn’t coming to fruition. They kept changing our direction . . . there was a lot of political agendas that weren’t matching up,” said the worker.

“Everybody knew (this was coming). Atlanta did such a poor job of disguising it.”

Panasonic is part of Tokyo-based Matsushita Electric Industrial Co., which develops and manufactures electronics products for a wide range of consumer, business and industrial needs.

Its brand names include National, Technics and Quasar, and the company operates other wireless design centres in Japan, Georgia and the U.K.

Panasonic had a false start in the fall of 2000 when it first announced the sod-turning for the new facility in “Telecom Triangle,” an area in northeast Calgary that hosts several players in the city’s wireless industry.

The company postponed the event just a week before the ceremony, with sources citing last-minute concerns over the lease. The sod-turning proceeded a month later in December, with the company announcing plans to hire about 150 engineers and 25 support staff working on third-generation wireless protocols.

Remington said Panasonic is now responsible for helping to find another tenant for the 50,000 sq. ft. of space they would have occupied in the state-of-the-art facility.

“We’re certainly not under pressure,” he added. “They’re still financially on the hook for another 10 years.”

Remington said he knew something was up when Panasonic starting letting go key people a few weeks ago.

“It’s certainly not a question of money, because Panasonic is doing very, very well,” he said. “They’re not to be lumped in with other high-tech companies like Nortel which are having issues. I guess it’s probably along a more global, overall downturn in that type of market.”

Calgary Chamber of Commerce president John Webb said he understands that many companies are going through rationalization, and the decision is by no means a black eye for Calgary’s wireless community.

“We’re disappointed,” Webb said. “We would have thought with our advantages locally that they could have made it work, but we don’t know the details of their business realities either.

“I think it’s just a corporate rationalization. It’s more balance-sheet expense consolidation than it is a specific development program.”

Panasonic’s research in Calgary was to have focused on developing the linking software in third-generation handheld devices that combine cellphone capability with Internet, e-mail and other converging wireless applications.

While Webb believes 3G research is still a big growth area, he said he doesn’t doubt there is a lot of pressure on the handset sector.

“Having been in telecommunications for a long time, I know that in the wired world, as more and more functionality went into the wired sets, the costs went through the roof,” said Webb, who as a former executive of Nortel in Calgary helped bring the first Nortel manufacturing plant to the city in the early ’80s.

“Nobody was making any money out of it. Then the market was opened to competition, and as the set prices went down they became loss leaders.

“The more cost you throw at a communications device, whether it’s wireless or wireline, the more problems you’re going to have down the road. Basic access to communications should not be expensive.”

John Masters, president of Calgary Technologies Inc., also called the Panasonic pullout unfortunate.

“We think their original rationale of choosing Calgary was because of the access of the critical mass of telecommunications engineering expertise,” Masters said.

“So while the bad news is that Panasonic is closed, the good news is we think we’ve got a pickup in the sector and because of that critical mass, these individuals will stay in Calgary.

“I don’t downplay what an individual will go through by losing a job, but in terms of the bigger picture, this is only a blip on the radar screen.”