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Matsushita Electric Industrial Co. (MC or 6752) is hoping to match the domestic success of its DVD recorders in overseas markets next year, company officials say. The Japanese consumer electronics giant is positioning DVD recorders as one of its key strategic products - what the company calls "Victory 21" products - to make a strong recovery after suffering huge losses in the fiscal year ended March 2002.

In Japan, "Panasonic" DVD recorders sell well, giving the company the leading position in the rapidly growing market segment. DVD recorders are expected to replace their aging predecessor, the video cassette recorder.

Matsushita has been producing DVD recorders and players at near full capacity since summer, and is ready to expand its output capacity when the market expands further, officials in Osaka said earlier this month.

Matsushita now makes 150,000 units a month of DVD-related consumer products at its flagship Kadoma factory in Osaka, including 80,000 units a month of DVD recorders. It hopes to boost its monthly production capacity of DVD recorders to 150,000 units within the next two years.

"We are hoping that the European and U.S. markets will pick up in fiscal 2003, " a Matsushita official said.

The company started launching DVD recorders in the European and the U.S. markets from autumn and now ships about 20,000 units monthly in each of the two regions.

"We introduced the cell production system from May 2001," said Kazunari Kinugawa, plant superintendent in Kadoma. "That allows us to trim plant-related investments to less than one-tenth, while being able to flexibly expand production capacity," he said.

Under the cell production system, small groups of workers manually assemble parts into consumer products in production lines comprised of simple work benches surrounded by parts boxes.

The system, which doesn't rely on a conveyor belt, is effective for high-mix, low-volume manufacturing. It allows companies to make quick and flexible adjustments to production lines as customer needs change.

Matsushita has plenty of space to expand capacity at the Kadoma plant after it took out most of the conveyor belts it used to make VCRs ahead of the introduction of the cell production system.