Panasonic Corp., the Japanese producer of refrigeration systems, display cases, consumer electronics and a host of other products, sees tremendous potential for the use of CO2 in commercial refrigeration and plans to leverage its recent acquisition of U.S. refrigeration manufacturer Hussmann Corp. to expand its sales of the technology around the globe.

Panasonic has been deploying CO2 condensing units in small-format stores in Japan and other Southeast Asian countries for the past several years. In addition to its extensive CO2 refrigeration deployment in Japan with convenience-store retailer Lawson, in 2014 Panasonic also launched a rollout with Lawson in Indonesia, and it has tests underway in Thailand and Taiwan. Earlier this year Panasonic unveiled a test of its CO2 refrigeration technology in Europe, with a pilot implementation in Denmark.

In an interview with Accelerate America, Tetsuro Homma, president, Appliances Company, Panasonic Corp., said the Osaka, Japan-based firm hopes to be able to use Bridgeton, Mo.-based Hussmann’s established sales and service network to introduce its CO2 refrigeration technology to foodservice and small-format food retailing businesses in the United States, Canada and Mexico.

“The last three or four years for us has been an experimental stage to prove that CO2 should be a mainstream, next-generation refrigerant technology, and now we have confidence that CO2 has potential to be the most popular technology in this industry,” said Homma. “So we’ll start to market not only in Japan and other Asian countries, but also Europe and United States.”

Homma cited the advantages of CO2 as a natural refrigerant, including its lack of toxicity, its low global warming potential and its energy efficiency.

“We operate several stores in cooperation with our customers and officials, and we already have evidence that CO2 refrigeration systems’ power consumption is lower than other refrigerant technologies,” Homma said. “We trust CO2 is very effective for customers’ costs.”

Panasonic has a wide-ranging interest in energy efficiency. Panasonic yielded more than 20% in power-consumption reductions (compared with the average nationwide figure in Japan) in 2015 after adding glass doors to its showcases. The study was conducted as part of the Japanese Ministry of Environment’s energy saving initiatives.

Homma said Panasonic would seek to leverage its scale to help ensure that its CO2 offering is price-competitive in the U.S.

Suited to small formats

Unlike the various CO2 refrigeration systems already in use in some large commercial installations in North America, the transcritical CO2 condensing unit technology Panasonic currently deploys in Asia is designed for small-format retail locations, such as convenience stores. Panasonic currently offers CO2 units with 2, 10, 15 and 20 horsepower (HP). A large retail space might need up to 20 such units.

Panasonic was scheduled to begin production of a 30HP CO2 unit, along with other variations of its small-store solutions, this year.

Homma confirmed that Panasonic’s plans call for Hussmann to market two types of commercial CO2 refrigeration technologies in North America — CO2 transcritical for larger installations and CO2 condensing units for smaller retail and foodservice locations.

Hussmann, in partnership with Quebec-based Systems LMP, has already been marketing CO2 transcritical refrigeration technologies — primarily to large-format retailers and other commercial customers — since 2014. Last year Aldi opened a store in West Seneca, N.Y., that operates the first Hussmann/LMP transcritical system in the U.S. Hussmann executives previously told that the Panasonic acquisition would have no impact on the Hussmann-LMP partnership.

The growth of small-format food retailing calls for “a new investment” in refrigeration technology for smaller types of stores, Homma said.

He said the company understood that the refrigeration systems used in the U.S. are different from the low-HP CO2 condensing systems Panasonic has deployed in Asia, but he added that the company was confident its experience with technology and engineering would help it transition to doing business in the U.S.

Panasonic’s success with commercial refrigeration systems in multiple climate conditions throughout Japan, as well as its experience in small-format stores in Indonesia, have given it confidence that its systems will prove effective in the warm regions across the Southern U.S. Some have questioned CO2’s effectiveness in such climates.

“We don’t feel there are any limitations by climate for CO2 technologies,” said Homma. “We have already introduced our system in Indonesia, where it is very warm and humid, and our system works really well. We trust our CO2 refrigerant system is workable for U.S. customers nationwide.”

Other technologies

In addition, Panasonic could leverage Hussmann’s network to market other Panasonic technologies, such as HVAC systems and cloud-based technology for controlling and monitoring store energy and refrigeration systems remotely.

“I trust we will have opportunities to promote our technologies to U.S., Canadian and Mexican customers, because Hussmann already has very good customer contacts, and a very good sales network, installation network and service network,” Homma said.

He said Panasonic planned to continue to allow Hussmann to operate autonomously as a wholly owned subsidiary with the support of the Japanese parent, much like the successful, California-based aviation business Panasonic has been operating in the U.S. for the past 30 years. Panasonic will also retain the Hussmann name for its newest U.S. division.

“We have some experience in how to operate business outside of Japan, and how to respect autonomy,” said Homma.

He said he recognizes the need for Hussmann to maintain its local customer connections.

“I would like to respect the current management team as much as possible, and I’d like to provide full support to make Hussmann successful in the U.S. foodservice and retail businesses,” Homma said.

The USD $1.545 billion acquisition of Hussmann, which was announced late last year and closed April 1, is part of a significant shift in business strategy for Panasonic, which generated revenues of $70 billion (7.7 trillion yen) in 2015. Long known for its consumer electronics and telecommunications products, the company has instead recently been redirecting its engineering resources toward more business-to-business technology solutions.

Homma said part of Panasonic’s shift in strategy towards B-to-B includes a focus on the foodservice and food retailing industries. Panasonic had been looking for two years for a company to acquire in the industry to expand its reach, he said.

Hussmann’s status as an end-to-end provider of products and services made it an ideal fit, Homma explained.

“We understand such a one-stop solution is very beneficial to this business, and Hussmann has this position,” he said. “They also have very wide and deep customer relationships, not only in the U.S., but also Mexico, Canada and the Pacific regions [Australia and New Zealand].” Homma noted that there is no regional overlap between the two companies.

In addition, he said the corporate cultures of the companies are similar. “We [both] have a customer-focused business culture,” Homma said. “I felt there was very good similarity, and we have a very good chemistry between the two companies, so I made the decision to welcome Hussmann as one of the Panasonic companies.”

This article was authored by Mark Hamstra and originally appeared in the April edition of Accelerate America.

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