Osaka - Sunday, July 24, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, explained today about the target that was set by the Japanese government in the Koizumi Administration and its achievement.
The target wet was to double the direct investment in Japan by foreign capital in four years to increase to 5% of GDP by the end of 2010; however, the achievement was 3.7% of GDP. Percentage of the increase in the direct investment in Japan was only around 50% of the original target.
This did not draw much attention from the economists and general public because the target was set by the Liberal Democratic Party (LDP), the leading party of that time and not Democratic Party of Japan (DPJ), the current leading party. However, this has much meaning to the economy.
1. What is the main reason/background that the target was not achieved?
It is the drastic decrease in the importance of Japan in Asia. According to a survey executed by Ministry of Economy, Trade and Industry (METI), the number of foreign capitals/companies withdrawing from in Japan has been larger than the number of foreign capitals/companies that has been entering Japan.
The recent survey executed by METI targeting foreign capitals/companies asking how attractive Japan is as a business site in Asia explicitly supports it. Japan was #1 for R&D site in 2007 but the #1 position was taken over by China and Japan became #2. Japan was #1 also as APAC Regional HQ but fallen to #4.
2. Why Japan is not as attractive as other Asian countries to invest in?
The main reason for decrease in the attractiveness of Japan as a business site in Asia (i.e. a country to invest in) might be summarized as the smaller growth compared with other countries but that is not all.
Other reasons include slow start of joining the competition with other countries of providing incentives to attract foreign investment in the country. Countries such as China, Korea and Singapore have been proactively providing incentives in the area of tax and regulation to promote foreign capitals entering their country.
The Japanese government also started to set policies to promote Japan as an attractive country to invest in but is rather slow. The plan of decreasing corporate tax that is currently extremely high compared with other countries is yet to be implemented. Tax incentives to be given to foreign capitals when requirements of investment, employment etc. are met is still being studied in the Diet and it seems that it takes a while for its implementation.
3. Is this issue only about foreign capitals? Would it affect decision making of Japanese companies as well?
It is not only about foreign capitals and it is more than likely to affect global strategy of Japanese companies as well. This is because all global companies including those based in Japan would need to develop and execute their global strategy pursuing optimum location in the world.
Indeed, a few Japanese global companies started to relocate “strategic and intelligence-oriented functions” such as strategic planning, R&D and marketing to other countries in Asia. Today, when more than half of the business is operated and revenue is generated outside the home country, global companies located in Japan would be asked for accountability to locate strategic department in Japan.
This means that not only manufacturing sites but also strategic and intelligence-oriented functions may well outflow from Japan to other countries in Asia if appropriate measures are not taken by the government, academia, and industries, both public and private sectors.
4. What is one possible primary solution in avoiding outflow of strategic and intelligence-oriented functions?
It is attracting and acquiring globally-competitive talents. According to Ms. Sanae Tachibana Fukushima, the advisor of Korn/Ferry International APAC, top management of Japanese global companies started to realize this in the last year or two. They did not understand the significance of recruiting non-Japanese talent in the global HQ located in Japan but now they are extremely proactive in acquiring talent from around the globe.
If globally-competitive talent can be attracted and acquired in Japan from around the globe, the significance of locating HQ and other strategic and intelligence-oriented functions in Japan as the site to develop and execute global strategy would drastically increase.
5. What would be necessary to create an environment to attract and acquire globally-competitive talents?
1) Talents from around the globe
The most important policy would be creating an environment for non-Japanese talents to work in Japan such as making them easier to acquire visa to live and work in Japan. Providing them with tax incentive could be another option. Of course, providing talents with attractive work environment and challenging opportunities for development would also be vital as well.
2) Japanese talents from Japan
Improve education level of universities in Japan to up-level new graduates and increase the talent pool especially of scientists and engineers. And provide talents with attractive work environment and challenging opportunities for development.
6. What other requirements are necessary to make Japan more attractive country to invest in?
One is to make Japan be involved in the global network of EPA. Another is globally-competitive financial (stock/capital) market.
Both requirements are vital in today’s global economy, which requires initiative from the government meaning strong leadership.
Resources:-
Direct investment to Japan by foreign capitals has been sluggish when direct investment to other countries in Asia has been increasing. This attributes mainly to the differences in tax and regulation incentives to attract investments by foreign capitals, which would impact global strategy of Japanese companies as well. Creating an environment to attract globally-competitive talents worldwide, joining EPA and improving globally competitive financial market are requirements to improve the attractiveness of the country to invest in.
2011年7月18日月曜日
Retailers Invest in Toyoku for Recovery from the Japan Disaster
Osaka - Monday, July 18, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that leading Japanese retailers are heavily investing in Tohoku area, the most hard hit regions by the earthquake and tsunami that broke out on March 11 such as opening new shops and reforming current shops.
Population of Tohoku region has been on the decrease and recovery plan of local government from the disaster has not been proceeding quickly; however, the retailers believe that recovery consumption from the disaster to rebuild everyday lives of the victims would be sustainable and therefore they have started to heavily invest in the area.
1. How has been the recent business trend of retailers in the Tohoku area?
According to sales trend of large retailers recently announced by Ministry of Economy, Trade and Industry (METI), sales of department stores and supermarkets for May in the 6 Tohoku prefectures (Aomori, Akita, Iwate, Miyagi, Yamagata and Fukushim) was 1.5% increase from May 2010 when it was 1.3% decrease from Ma 2010 for nationwide. Similarly, it was 10.9% increase for convenience stores in six Tohoku prefectures when it was 7.3% increase for nationwide.
This partly attributes to the fact that large franchise retailers have been investing to cover up for the local shops that went out of business immediately after the disaster.
Consumer electronics mass merchandisers and others follow the very similar trend as well.
2. How are retailers aggressively opening new shops in Tohoku?
1) Convenience Stores
Mini Stop (under the umbrella of Aeon, the leading supermarket in Japan), is to open 100 new shops in Miyagi and Fukushima in three years starting 2011. This is three times more new shops to be opened from the original plan made before the outbreak of the disaster. The locations of the new shops are concentrated in such cities as Imaki in Miyagi and coastal areas of Sendai where the recovery and rebuilt of the area is needed the most. The company plans to employ victims as contract workers and support relocation and housing.
Family Mart plans to open 85 new stores in Iwate, Miyagi and Fukushima including temporary ones, which is five times that of the original plan made before the disaster outbreak.
Seven Eleven Japan and Lawson have not changed their plan of new store opening but they are to proactively open temporal stores in the devastated area according the local needs.
2) Others
K’s Holdings, a consumer electronics mass merchandiser, say that their sales for June in the six Tohoku prefectures were 50% increase from June 2010, when it was 40% increase nationwide. The chairman of the company commented that the recovery consumption is estimated to continue for the next two or three years and therefore the company is to increase the number of new stores to be opened from its original plan of one to four.
Yamada, the consumer electronics mass merchandiser leader in Japan, also plans to open 15 to 20 stores in the six Tohoku prefectures this year.
Tsuruha Holdigs, a leading drug store in Japan, plans to open 34 new stores in 2011. This is 60% increase from the previous year.
3. How retailers plan to meet recovery demand by reviewing their current shops?
Aeon is to invest 12 – 13 billion yen in reforming their current supermarket stores in Tohoku, in addition to their regular reform investment. The company also plans to expand shop floors of housing related products and services and so forth to meet the local needs that are to go through recovery from the disaster.
Itoyokado, supermarket franchise company under the umbrella of Seven and i Holdings, originally planned to close seven stores nationwide in 2012 but revised to close two stores because the recent consumption is strong. The five stores that are now to continue their business seem to include those located in Tohoku. The top executive of the company commented that their plan revision is also to support the recovery of the devastated area.
4. Is it only retailers that are proactively investing in Tohoku?
No, because the recovery consumption is expected to range not only in other sectors as well.
For example, Kohnan, a leader in Do It Yourself (DIY) industry in Japan, is to open new stores specialized BtoB in selling building materials and industrial tools for construction companies operating in Tohoku in order to benefit from increase in construction demand in the area. The company plans to open the first store in October in Sendai City and five or six more stores in Miyagi by the end of this year.
Resources:-
When many factories etc. are being relocated away from Tohoku and eastern Japan, retailers are proactively investing in Tohoku, especially in the devastated area, in order to benefit from recovery consumption from the disaster and also to support the recovery and reconstruction of the devastated area. The recovery consumption is likely to be not limited to retailers (products and services related to everyday lives of people) but also to other sectors such as BtoB of construction related industries.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that leading Japanese retailers are heavily investing in Tohoku area, the most hard hit regions by the earthquake and tsunami that broke out on March 11 such as opening new shops and reforming current shops.
Population of Tohoku region has been on the decrease and recovery plan of local government from the disaster has not been proceeding quickly; however, the retailers believe that recovery consumption from the disaster to rebuild everyday lives of the victims would be sustainable and therefore they have started to heavily invest in the area.
1. How has been the recent business trend of retailers in the Tohoku area?
According to sales trend of large retailers recently announced by Ministry of Economy, Trade and Industry (METI), sales of department stores and supermarkets for May in the 6 Tohoku prefectures (Aomori, Akita, Iwate, Miyagi, Yamagata and Fukushim) was 1.5% increase from May 2010 when it was 1.3% decrease from Ma 2010 for nationwide. Similarly, it was 10.9% increase for convenience stores in six Tohoku prefectures when it was 7.3% increase for nationwide.
This partly attributes to the fact that large franchise retailers have been investing to cover up for the local shops that went out of business immediately after the disaster.
Consumer electronics mass merchandisers and others follow the very similar trend as well.
2. How are retailers aggressively opening new shops in Tohoku?
1) Convenience Stores
Mini Stop (under the umbrella of Aeon, the leading supermarket in Japan), is to open 100 new shops in Miyagi and Fukushima in three years starting 2011. This is three times more new shops to be opened from the original plan made before the outbreak of the disaster. The locations of the new shops are concentrated in such cities as Imaki in Miyagi and coastal areas of Sendai where the recovery and rebuilt of the area is needed the most. The company plans to employ victims as contract workers and support relocation and housing.
Family Mart plans to open 85 new stores in Iwate, Miyagi and Fukushima including temporary ones, which is five times that of the original plan made before the disaster outbreak.
Seven Eleven Japan and Lawson have not changed their plan of new store opening but they are to proactively open temporal stores in the devastated area according the local needs.
2) Others
K’s Holdings, a consumer electronics mass merchandiser, say that their sales for June in the six Tohoku prefectures were 50% increase from June 2010, when it was 40% increase nationwide. The chairman of the company commented that the recovery consumption is estimated to continue for the next two or three years and therefore the company is to increase the number of new stores to be opened from its original plan of one to four.
Yamada, the consumer electronics mass merchandiser leader in Japan, also plans to open 15 to 20 stores in the six Tohoku prefectures this year.
Tsuruha Holdigs, a leading drug store in Japan, plans to open 34 new stores in 2011. This is 60% increase from the previous year.
3. How retailers plan to meet recovery demand by reviewing their current shops?
Aeon is to invest 12 – 13 billion yen in reforming their current supermarket stores in Tohoku, in addition to their regular reform investment. The company also plans to expand shop floors of housing related products and services and so forth to meet the local needs that are to go through recovery from the disaster.
Itoyokado, supermarket franchise company under the umbrella of Seven and i Holdings, originally planned to close seven stores nationwide in 2012 but revised to close two stores because the recent consumption is strong. The five stores that are now to continue their business seem to include those located in Tohoku. The top executive of the company commented that their plan revision is also to support the recovery of the devastated area.
4. Is it only retailers that are proactively investing in Tohoku?
No, because the recovery consumption is expected to range not only in other sectors as well.
For example, Kohnan, a leader in Do It Yourself (DIY) industry in Japan, is to open new stores specialized BtoB in selling building materials and industrial tools for construction companies operating in Tohoku in order to benefit from increase in construction demand in the area. The company plans to open the first store in October in Sendai City and five or six more stores in Miyagi by the end of this year.
Resources:-
When many factories etc. are being relocated away from Tohoku and eastern Japan, retailers are proactively investing in Tohoku, especially in the devastated area, in order to benefit from recovery consumption from the disaster and also to support the recovery and reconstruction of the devastated area. The recovery consumption is likely to be not limited to retailers (products and services related to everyday lives of people) but also to other sectors such as BtoB of construction related industries.
2011年6月26日日曜日
Japanese Companies Performance to Rapidly Recover Latter Half of 2011
Osaka - Sunday, June 26, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that performance of Japanese listed companies for the latter half of fiscal year 2011 ending March 2012 is to rapidly recover. This is expected to result in as small as 6% decrease vs. previous year for consolidated profit for the total fiscal year ending March 2012.
This is primarily to be driven by demand from recovery from the Japan disaster, which is why revenue increase by24% is anticipated in the latter half of 2011. It is possible that automobile production recovery quicker than their original plan also is to contribute to profitability enhancement.
Having said that, the reality is the performance among many industries was at a low level in the first half of 2011 due to the disaster. Moreover, if yen should get higher than anticipated it could trade off the anticipated revenue increase.
1. How did Nikkei come to the conclusion?
Nikkei collected and analyzed financial data of 1,533 listed companies (excluding financial and new companies) whose financial announcement for financial announcement ending March 2010 has been made by June 25. EBITA (earning before income tax) was used for companies that adopt GAAP (generally accepted accounting principles). TEPCO (Tokyo Electric Power Co., Inc) was excluded because their outlook is uncertain.
2. What is the conclusion?
Profit for the fiscal year ending March 2012 is estimated to be 22.76 trillion yen, which is only 6% decrease from the fiscal year ending March 2011. Profit has been increasing for the past three quarters since the quarter ending March 2009 and therefore the estimation may sound negative. However, this is far greater than the fiscal year ending March 2010 which was 15.53 trillion yen. This is approximately 70% of the greatest profit in history for the fiscal year ending March 2008.
The trend of the fiscal year ending March 2012 is expected to be “slump in the first half, recovery in the second half”.
3. What are the reasons for the slump of the first half of the fiscal year?
They are primarily the broken link of supply chain and depressed consumer consumption. As a result, profit is estimated to be 8.8 trillion yen, which is minus 32% from the previous year.
In the case of Toyota for example, it is estimated to be in the red by 100 billion yen. And for automobile and its component industries, profit is expected to be minus 93% from the previous year.
Slump of automobile impacts wide a scope of industries. For example, profit of Furukawa Electric Co., Ltd. is estimated to be 9 billion yen, which is minus 44% from the previous year because of the decrease in orders of automobile components. The company is cautious in making estimation of production recovery; it estimates that their production for July and August this year will be only as much as 80% of the July and August of 2010. Automobile shipment is estimated to be 1.1 million cars, which is minus 26% from the previous year according to NYK Line.
4. What are the reasons for expected drastic recovery in the second half of the fiscal year?
Demand increase of the recovery from the disaster and increase in overseas sales are expected to highly contribute to 24% increase in profit from the previous year, reaching profit of 13.96 trillion yen.
For example, profit of Toshiba is expected to increase by 42% from the previous year, which is to be a drastic recovery from 13% decrease in the first half. This is because of the anticipated demand increase of recovery from the disaster in sectors such as consumer electronics and infrastructure. For the same reason, 53% increase in profit is expected for iron and steel and 26% increase in profit is expected for construction as well.
With such profitability recovery, 48% of companies calculated are expected to improve in revenue and/or profitability.
Automobile production in Japan is to return to the previous year level by as early as July. Honda even plans to increase by 20% after autumn.
5. Are there any possible negative factors for performance recovery?
Yes, there are.
One is exchange rate. Many companies estimate the exchange rate to be 1 USD = 80 – 85 JPY and 1 Euro = 115 JPY. However, the current yen exchange rate is already at their profitability limit and if the yen should get higher there is a risk of decrease in their profitability from export business.
Limit in electricity supply is the other major negative factor. If re-start of operation of nuclear power plants that are currently being inspected for regular inspection and maintenance should delay, it would be a negative factor for the performance for the second half of the fiscal year ending March 2012.
Resources:-
Nikkei, Japan’s leading newspaper specialized in business and economy, estimated that financial performance of Japanese companies are to drastically recovering in the second half of fiscal year ending March 2012, from slump in the first half attributing to the broken supply chain and consumer spending cut due to the Japan disaster. Such recovery is expected primarily because of demand increase of recovery from the disaster. However, there are possible negative factors for the drastic recovery such as exchange rate (high yen) and electricity supply limit.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that performance of Japanese listed companies for the latter half of fiscal year 2011 ending March 2012 is to rapidly recover. This is expected to result in as small as 6% decrease vs. previous year for consolidated profit for the total fiscal year ending March 2012.
This is primarily to be driven by demand from recovery from the Japan disaster, which is why revenue increase by24% is anticipated in the latter half of 2011. It is possible that automobile production recovery quicker than their original plan also is to contribute to profitability enhancement.
Having said that, the reality is the performance among many industries was at a low level in the first half of 2011 due to the disaster. Moreover, if yen should get higher than anticipated it could trade off the anticipated revenue increase.
1. How did Nikkei come to the conclusion?
Nikkei collected and analyzed financial data of 1,533 listed companies (excluding financial and new companies) whose financial announcement for financial announcement ending March 2010 has been made by June 25. EBITA (earning before income tax) was used for companies that adopt GAAP (generally accepted accounting principles). TEPCO (Tokyo Electric Power Co., Inc) was excluded because their outlook is uncertain.
2. What is the conclusion?
Profit for the fiscal year ending March 2012 is estimated to be 22.76 trillion yen, which is only 6% decrease from the fiscal year ending March 2011. Profit has been increasing for the past three quarters since the quarter ending March 2009 and therefore the estimation may sound negative. However, this is far greater than the fiscal year ending March 2010 which was 15.53 trillion yen. This is approximately 70% of the greatest profit in history for the fiscal year ending March 2008.
The trend of the fiscal year ending March 2012 is expected to be “slump in the first half, recovery in the second half”.
3. What are the reasons for the slump of the first half of the fiscal year?
They are primarily the broken link of supply chain and depressed consumer consumption. As a result, profit is estimated to be 8.8 trillion yen, which is minus 32% from the previous year.
In the case of Toyota for example, it is estimated to be in the red by 100 billion yen. And for automobile and its component industries, profit is expected to be minus 93% from the previous year.
Slump of automobile impacts wide a scope of industries. For example, profit of Furukawa Electric Co., Ltd. is estimated to be 9 billion yen, which is minus 44% from the previous year because of the decrease in orders of automobile components. The company is cautious in making estimation of production recovery; it estimates that their production for July and August this year will be only as much as 80% of the July and August of 2010. Automobile shipment is estimated to be 1.1 million cars, which is minus 26% from the previous year according to NYK Line.
4. What are the reasons for expected drastic recovery in the second half of the fiscal year?
Demand increase of the recovery from the disaster and increase in overseas sales are expected to highly contribute to 24% increase in profit from the previous year, reaching profit of 13.96 trillion yen.
For example, profit of Toshiba is expected to increase by 42% from the previous year, which is to be a drastic recovery from 13% decrease in the first half. This is because of the anticipated demand increase of recovery from the disaster in sectors such as consumer electronics and infrastructure. For the same reason, 53% increase in profit is expected for iron and steel and 26% increase in profit is expected for construction as well.
With such profitability recovery, 48% of companies calculated are expected to improve in revenue and/or profitability.
Automobile production in Japan is to return to the previous year level by as early as July. Honda even plans to increase by 20% after autumn.
5. Are there any possible negative factors for performance recovery?
Yes, there are.
One is exchange rate. Many companies estimate the exchange rate to be 1 USD = 80 – 85 JPY and 1 Euro = 115 JPY. However, the current yen exchange rate is already at their profitability limit and if the yen should get higher there is a risk of decrease in their profitability from export business.
Limit in electricity supply is the other major negative factor. If re-start of operation of nuclear power plants that are currently being inspected for regular inspection and maintenance should delay, it would be a negative factor for the performance for the second half of the fiscal year ending March 2012.
Resources:-
Nikkei, Japan’s leading newspaper specialized in business and economy, estimated that financial performance of Japanese companies are to drastically recovering in the second half of fiscal year ending March 2012, from slump in the first half attributing to the broken supply chain and consumer spending cut due to the Japan disaster. Such recovery is expected primarily because of demand increase of recovery from the disaster. However, there are possible negative factors for the drastic recovery such as exchange rate (high yen) and electricity supply limit.
2011年6月12日日曜日
Recovery from the Japan Disaster – Achievements and Challenges
Osaka - Sunday, June 12, 2011
Nikkei, Japan’s leading newspaper specialized in economy and business, reported on June 11 about the recovery status from the Japan Disaster that resulted in 23,500 people dead or missing after 3 months. Business community in general has been recovering well. Production of many global companies is recovering even in the most hardly hit industries such as automobile and electronics.
However, recovery in other area/items remain slow. Over 90,000 people remain evacuated and much time is required for victims to return to normal lives. Financial assistance to victims and small and mid-sized companies impacted by the disaster remains insufficient. Converge of Fukushima nuclear plant accident seems to take time and electricity shortage is spreading nationwide as explained in the previous article Electricity Shortage Throughout Japan – Effects and Solutions.
1. How is the recovery status of each item?
1) Items related to lives of victims
(1) Electricity
Electricity for all houses and buildings are expected to recover by June 20 excluding those that have been swayed by the tsunami.
(2) Water
97% has recovered. 59,000 houses remain without water (as of June 7).
(3) Financial institutes
Total of 55 branches in Iwate, Miyagi and Fukushima remain closed (as of June 9).
2) Transportation infrastructure
(1) Railways
Shinkansen bullet train operation is to return to normal in autumn this year. Recovery of some local trains of East Japan Railway remains a question.
(2) Roads
All national motorways have recovered excluding those in the caution zone of the nuclear plant accident. 148 sections of prefectural motorways and local roads remain blocked (as of June 6).
(4) Ports
Approximately 45% docks of major ports have recovered (as of June 6).
3) Business community
(1) Supply chain
Overall supply chain has been recovering quicker than anticipated. This is because head offices and business partners made upmost efforts to quickly absorb the local needs to take actions for supply chain recovery.
(2) Automobile
Toyota and Nissan mostly have returned to normal production status. Honda is operating at 70 – 80% of its plan.
(3) Electronics
Semiconductor/micro computer shipment is to recover by autumn this year.
(4) Oil
Production facility of a leading Japanese oil company in Sendai is expected to recover in summer next year.
2. What is a particular case of a global company based in Japan?
An example introduced by Nikkei was of Sony.
10 production sites once stopped operating but the site in Miyagi that was the slowest to recover started partial production in the end of May. The site produces such products as Blu-ray disc recorders and the damage from the tsunami was extraordinary,
Their plan was not to recover as it was before the disaster but to remake a site to a new one. Items produced at the site were selected with care for higher efficiency and productivity. The space created is to be rented to local small and mid-sized companies that lost their offices from tsunami. Mr. Stringer, the CEO, commented when he visited the site that he felt the passion from the shop floor members to make the new site that is far better from pre-disaster.
3. How are small and mid-sized companies?
Recovery of small and mid-sized companies remain rather slow, which is why over 40,000 people in Iwate, Miyagi and Fukushima became unemployed from the disaster and seeking to fine a new job.
This is mostly because of insufficient financial assistance to such companies and individual business owners, although on June 10 Minister of Financial Affairs said with pride that maximum efforts have been made by Financial Service Agency. Some are forced to transfer not only production site but also head office function because of the ongoing effect from the nuclear plant accident, which means much financial burden.
In such a severe situation, many of them have been working hard to overcome challenges. One example is a component manufacturing company supplying to car navigation system manufacturers. The company was located in the coastal area but all production equipments were swayed by the tsunami. The top executive once gave up business continuity but transferred the facility to a warehouse which in 49km inland area and restarted its operation.
4. What are the author’s final thoughts?
Considering the geographical size and complexity of the disaster, the recovery pace is amazing in general. This seems to mostly attribute to “gembaryoku” (leadership and management capability of the local community and shop floor members), which is the strengths of Japan and its companies as often mentioned.
What is lacking yet critical to speed up the recovery in the slow recovery areas/items is strong leadership especially from the government. In contrast to “gembaryoku”, leadership and management capability of the people high up in the organization are often said as the weakness of Japan. Such weakness became prominent in the recovery from the disaster.
The last paragraph of the Nikkei article depicts this and the compelling message from the victims and the citizens. It is the fact that when Mr. Okada, Secretary General of the Democratic Party of Japan visited Sendai, a victim whose house is severely damaged with landslide said to Mr. Okada, “why don’t politicians really understand the reality of the devastated area and quickly take actions instead of fighting among politicians in the Diet”.
Resources:-
The recovery from the Japan disaster in the 3 months since March 11 is in general remarkable. This is mainly due to efforts by local people and companies. However, recovery of small and mid-sized companies and lives of victims remain slow. This is mainly due to insufficient financial support from the government. What is critical to boost recovery pace is strong leadership especially from the government.
Nikkei, Japan’s leading newspaper specialized in economy and business, reported on June 11 about the recovery status from the Japan Disaster that resulted in 23,500 people dead or missing after 3 months. Business community in general has been recovering well. Production of many global companies is recovering even in the most hardly hit industries such as automobile and electronics.
However, recovery in other area/items remain slow. Over 90,000 people remain evacuated and much time is required for victims to return to normal lives. Financial assistance to victims and small and mid-sized companies impacted by the disaster remains insufficient. Converge of Fukushima nuclear plant accident seems to take time and electricity shortage is spreading nationwide as explained in the previous article Electricity Shortage Throughout Japan – Effects and Solutions.
1. How is the recovery status of each item?
1) Items related to lives of victims
(1) Electricity
Electricity for all houses and buildings are expected to recover by June 20 excluding those that have been swayed by the tsunami.
(2) Water
97% has recovered. 59,000 houses remain without water (as of June 7).
(3) Financial institutes
Total of 55 branches in Iwate, Miyagi and Fukushima remain closed (as of June 9).
2) Transportation infrastructure
(1) Railways
Shinkansen bullet train operation is to return to normal in autumn this year. Recovery of some local trains of East Japan Railway remains a question.
(2) Roads
All national motorways have recovered excluding those in the caution zone of the nuclear plant accident. 148 sections of prefectural motorways and local roads remain blocked (as of June 6).
(4) Ports
Approximately 45% docks of major ports have recovered (as of June 6).
3) Business community
(1) Supply chain
Overall supply chain has been recovering quicker than anticipated. This is because head offices and business partners made upmost efforts to quickly absorb the local needs to take actions for supply chain recovery.
(2) Automobile
Toyota and Nissan mostly have returned to normal production status. Honda is operating at 70 – 80% of its plan.
(3) Electronics
Semiconductor/micro computer shipment is to recover by autumn this year.
(4) Oil
Production facility of a leading Japanese oil company in Sendai is expected to recover in summer next year.
2. What is a particular case of a global company based in Japan?
An example introduced by Nikkei was of Sony.
10 production sites once stopped operating but the site in Miyagi that was the slowest to recover started partial production in the end of May. The site produces such products as Blu-ray disc recorders and the damage from the tsunami was extraordinary,
Their plan was not to recover as it was before the disaster but to remake a site to a new one. Items produced at the site were selected with care for higher efficiency and productivity. The space created is to be rented to local small and mid-sized companies that lost their offices from tsunami. Mr. Stringer, the CEO, commented when he visited the site that he felt the passion from the shop floor members to make the new site that is far better from pre-disaster.
3. How are small and mid-sized companies?
Recovery of small and mid-sized companies remain rather slow, which is why over 40,000 people in Iwate, Miyagi and Fukushima became unemployed from the disaster and seeking to fine a new job.
This is mostly because of insufficient financial assistance to such companies and individual business owners, although on June 10 Minister of Financial Affairs said with pride that maximum efforts have been made by Financial Service Agency. Some are forced to transfer not only production site but also head office function because of the ongoing effect from the nuclear plant accident, which means much financial burden.
In such a severe situation, many of them have been working hard to overcome challenges. One example is a component manufacturing company supplying to car navigation system manufacturers. The company was located in the coastal area but all production equipments were swayed by the tsunami. The top executive once gave up business continuity but transferred the facility to a warehouse which in 49km inland area and restarted its operation.
4. What are the author’s final thoughts?
Considering the geographical size and complexity of the disaster, the recovery pace is amazing in general. This seems to mostly attribute to “gembaryoku” (leadership and management capability of the local community and shop floor members), which is the strengths of Japan and its companies as often mentioned.
What is lacking yet critical to speed up the recovery in the slow recovery areas/items is strong leadership especially from the government. In contrast to “gembaryoku”, leadership and management capability of the people high up in the organization are often said as the weakness of Japan. Such weakness became prominent in the recovery from the disaster.
The last paragraph of the Nikkei article depicts this and the compelling message from the victims and the citizens. It is the fact that when Mr. Okada, Secretary General of the Democratic Party of Japan visited Sendai, a victim whose house is severely damaged with landslide said to Mr. Okada, “why don’t politicians really understand the reality of the devastated area and quickly take actions instead of fighting among politicians in the Diet”.
Resources:-
The recovery from the Japan disaster in the 3 months since March 11 is in general remarkable. This is mainly due to efforts by local people and companies. However, recovery of small and mid-sized companies and lives of victims remain slow. This is mainly due to insufficient financial support from the government. What is critical to boost recovery pace is strong leadership especially from the government.
2011年6月11日土曜日
Electricity Shortage Throughout Japan – Effects and Solutions
Osaka - Saturday, June 11, 2011
Nikkei, Japan’s leading newspaper specialized in economy and business, reported on June 10 that not only TEPCO but also Kansai Electric Power Co., Inc. (KEPCO) in western Japan, also is to request 15% electricity cut in summer. This is because they cannot plan to re-start operation of nuclear plant currently going through regular inspection and maintenance and they are to make the request before the electricity supply shortage becomes a reality.
Other electricity companies such as those in Kyushu (in southern Japan) are also studying to make a same request, and thus electricity supply shortage issue is now not limited to eastern Japan.
1. How is electricity supply plan in eastern Japan directly impacted by Fukushima nuclear plant accident?
Due to the accident, Fukushima nuclear plant operation is terminated and therefore electricity shortage is a critical issue in eastern Japan. This is why there had been “planned” blackouts even in Kanto (e.g. Tokyo, Yokohama, Chiba) in March.
For this reason, electricity power companies in eastern Japan, i.e. Tokyo/Tohoku Electric Power Co., Inc. (TEPCO) is to execute limiting electricity supply based on Electricity Business Act by Ministry of Economy, Trade and Industry (METI). Under this law, companies and organizations that consume large amount of electricity (with contract of over 500 kW) are obliged to cut electricity use from July by 15% from the peak last summer. If this is not achieved, companies and organizations are to get penalty of less than 1 million yen.
The 15% electricity cut request will not have a legal power over organizations with contract of less than 500kW and individual householders; however, they also would be encouraged to cut electricity use by 15% and will be rewarded when achieved.
2. What is KEPCO’s request and why was it made?
The same request i.e. 15% electricity cut from July is to be made by KEPCO to organizations in its responsible area (e.g. Osaka, Kyoto, Hyogo, Mie, Gifu, Fukui) but this would not have a legal obligation.
KEPCO decided to make the request because from July, three out of eleven nuclear plants in KEPCO area will be going through regular inspection and maintenance, which means together with the nuclear plants that are already going through regular inspection and maintenance, six out of eleven nuclear plants will not be in operation. This is because of lack of understanding and approval to restart the operation of the nuclear plants after the inspection and maintenance. Consequently, it is estimated that electricity supply will become short by some 5% at the peak in summer.
3. How are electricity power companies in other area?
Electricity power companies in Kyushu (southern Japan), Hokuriku (Japan Sea Cost area) and Shikoku (Shikoku Island in western Japan) may also follow KEPCO for the very same reason.
The only are that is not impacted is Okinawa because there is no nuclear plant in Okinawa.
4. How would this impact business community?
It is quite certain that this would have increase negative impact on production and business strategy of business community because many of them have been transferring part of their production from eastern to western Japan due to the current electricity shortage in eastern Japan.
For example, Toshiba has already decided and is transferring the production of system LSI and micro computer from Iwate to Kyushu. The company also has already planned to shift data centre operation from eastern to western Japan.
5. What are the author’s final thoughts?
KEPCO’s request is rationale because it is necessary for them to take action before it is too late. However, what really needs to be discussed and solved are the new energy policy of the country and the roadmap and plant for smooth transition to the new policy.
The new energy policy discussion would include topics such as positioning of nuclear power and possibilities of alternate energy. This is of a mid to long-term, political issue, to be initiated by the government.
The transition discussion would include topics such as termination/restart of nuclear power plants after regular inspection and maintenance together with pros and cons, possibilities of electricity generation by other means, and efficient use of electricity. This is mostly of short-tem issues, to be initiated by the government.
And, in execution, concise message needs to be developed and communicated with transparency by the government and electricity companies to all stakeholders to convince them and win their understanding and support. This means strong leadership is required.
Resources:-
Electricity shortage is spreading to not only eastern Japan but nationwide. This is because nuclear power plant operation cannot be restarted after regular inspection and maintenance due to lack of understanding and consensus from the local community. This is to impact business community when many companies have been transferring their production and other functions from eastern to western Japan. Japan needs strong leadership to develop and execute new energy policy with smooth transition.
Nikkei, Japan’s leading newspaper specialized in economy and business, reported on June 10 that not only TEPCO but also Kansai Electric Power Co., Inc. (KEPCO) in western Japan, also is to request 15% electricity cut in summer. This is because they cannot plan to re-start operation of nuclear plant currently going through regular inspection and maintenance and they are to make the request before the electricity supply shortage becomes a reality.
Other electricity companies such as those in Kyushu (in southern Japan) are also studying to make a same request, and thus electricity supply shortage issue is now not limited to eastern Japan.
1. How is electricity supply plan in eastern Japan directly impacted by Fukushima nuclear plant accident?
Due to the accident, Fukushima nuclear plant operation is terminated and therefore electricity shortage is a critical issue in eastern Japan. This is why there had been “planned” blackouts even in Kanto (e.g. Tokyo, Yokohama, Chiba) in March.
For this reason, electricity power companies in eastern Japan, i.e. Tokyo/Tohoku Electric Power Co., Inc. (TEPCO) is to execute limiting electricity supply based on Electricity Business Act by Ministry of Economy, Trade and Industry (METI). Under this law, companies and organizations that consume large amount of electricity (with contract of over 500 kW) are obliged to cut electricity use from July by 15% from the peak last summer. If this is not achieved, companies and organizations are to get penalty of less than 1 million yen.
The 15% electricity cut request will not have a legal power over organizations with contract of less than 500kW and individual householders; however, they also would be encouraged to cut electricity use by 15% and will be rewarded when achieved.
2. What is KEPCO’s request and why was it made?
The same request i.e. 15% electricity cut from July is to be made by KEPCO to organizations in its responsible area (e.g. Osaka, Kyoto, Hyogo, Mie, Gifu, Fukui) but this would not have a legal obligation.
KEPCO decided to make the request because from July, three out of eleven nuclear plants in KEPCO area will be going through regular inspection and maintenance, which means together with the nuclear plants that are already going through regular inspection and maintenance, six out of eleven nuclear plants will not be in operation. This is because of lack of understanding and approval to restart the operation of the nuclear plants after the inspection and maintenance. Consequently, it is estimated that electricity supply will become short by some 5% at the peak in summer.
3. How are electricity power companies in other area?
Electricity power companies in Kyushu (southern Japan), Hokuriku (Japan Sea Cost area) and Shikoku (Shikoku Island in western Japan) may also follow KEPCO for the very same reason.
The only are that is not impacted is Okinawa because there is no nuclear plant in Okinawa.
4. How would this impact business community?
It is quite certain that this would have increase negative impact on production and business strategy of business community because many of them have been transferring part of their production from eastern to western Japan due to the current electricity shortage in eastern Japan.
For example, Toshiba has already decided and is transferring the production of system LSI and micro computer from Iwate to Kyushu. The company also has already planned to shift data centre operation from eastern to western Japan.
5. What are the author’s final thoughts?
KEPCO’s request is rationale because it is necessary for them to take action before it is too late. However, what really needs to be discussed and solved are the new energy policy of the country and the roadmap and plant for smooth transition to the new policy.
The new energy policy discussion would include topics such as positioning of nuclear power and possibilities of alternate energy. This is of a mid to long-term, political issue, to be initiated by the government.
The transition discussion would include topics such as termination/restart of nuclear power plants after regular inspection and maintenance together with pros and cons, possibilities of electricity generation by other means, and efficient use of electricity. This is mostly of short-tem issues, to be initiated by the government.
And, in execution, concise message needs to be developed and communicated with transparency by the government and electricity companies to all stakeholders to convince them and win their understanding and support. This means strong leadership is required.
Resources:-
Electricity shortage is spreading to not only eastern Japan but nationwide. This is because nuclear power plant operation cannot be restarted after regular inspection and maintenance due to lack of understanding and consensus from the local community. This is to impact business community when many companies have been transferring their production and other functions from eastern to western Japan. Japan needs strong leadership to develop and execute new energy policy with smooth transition.
2011年5月22日日曜日
Turning Point of Japan’s Energy Policy
Osaka - Sunday, May 22, 2011
In a popular morning TV programme this morning, there was an interesting short discussion on energy policy of Japan, which started with the excerpt of the recent comment of Prime Minister Naoto Kan about “separation of power generation and power transmission”.
The basic idea agreed by the panelists was that Japan is at the verge of change in its energy policy, which requires paradigm shift in the way of thinking, and that vision based on solid philosophy delivered effectively and clearly by the Prime Minister.
1. How has electricity power business in Japan been until today?
Currently, electricity power companies such as Tokyo/Tohoku Electric Power Co., Inc. (TEPCO) have been responsible for both generation and transmission of electricity/power, based on the concept of “stable electricity supply”. In short, it has been of centralization of power supply
Under this situation, electricity power companies allocated by regions of responsibility such as Tokyo/Kanto, Tohoku (north eastern Japan), Chubu (midlands including Aichi where Toyota is located), and Kansai (Osaka, Kyoto, Kobe etc.) have been monopolizing electricity power businesses in their region.
2. What is “separation of power generation and power transmission” and what could it mean?
It is to separate power transmission from power generation.
This means dispersion and diversification of power transmission from centralization. It is quite similar to the ongoing transformation of information by the emergence of the Internet and social media.
It can be also quite similar to what happened in capital by the financial policy change before 2000 that triggered “Financial Big Bang” and reorganization of financial industry/sector in Japan. This was due to implementation of principle of competition and market mechanism in the financial sector.
Separation of power generation and power transmission is expected to implement the same principle in the energy supply sector as well, allowing power supply companies enter the market. It could also mean individuals who generated electricity by such system as solar to provide electricity to the public.
As a result, it is quite possible that citizens would benefit from reduction in their monthly electricity fee payment.
3. Is there any country that implemented this policy with success?
Yes, there is. It is Germany.
As a result of separating power transmission from power generation, the supply of natural energy increased from 6% to 16%. And the country aims to further increase to 30% by 2015 or so.
4. What are other requirements to increase natural energy?
1) Financial support from the government
In the initial stage, support from the government, financial in particular, is required because cost of anything new to the market is extremely high. A good, easy-to-understand example is of AV product of new technology and/or format and the author would like to add the explanation of this mechanism.
For example, when first launched in the market, LCD and plasma flat panel TVs were so expensive that the general public could not afford. But with further technological innovation and others, the cost went down so it became more affordable for more people. The more people buy and use the product, the great the reduction of the price per unit due to reduction in production cost per unit.
And when it reaches a “critical mass”, the product becomes popular all of a sudden, which is usually said that when 16% of the people in the market use the product.
Financial support from the government at the initial stage could speed up the whole process in popularization of natural energy.
2) Vision, roadmap, regulations and systems set by the government
Easy-going approach would only lead to failure of natural energy popularization. Solid energy supply vision, roadmap, regulations and systems to achieve the vision. Not only Germany but all other countries that the government initiated popularization of natural energy developed and implemented them.
3) Environment to drive popularization
There may be many factors for an environment to drive popularization of natural energy. One is the recent popularization of smart grid.
5. What should happen to the nuclear power?
This is a question that provokes a hot discussion. There were interesting comments by a panelist of the TV programme, whom he said is that he is more of a person who has been initiating nuclear power.
That is that Japan is the only country that has been leveraging nuclear power for electricity use only and not for producing atomic bombs (although it is the only victim country from atomic bomb in World War II).
Japan is also a country that has engineers in this realm, and since there are many neighbouring countries that initiate nuclear power generation, Japan is expected to protect the engineers and allow/encourage them so that they can utilize their skills and know how to such countries.
6. What are the author’s final thoughts?
The author is not a specialist in this realm but from general understanding she fully understands what the panelists said and agrees, especially the comment about the nuclear power made at last as conclusion.
It might be ideal to abolish nuclear power immediately; however, it is simply not feasible to do so completely and immediately under current circumstances of power generation; i.e. balance of demand and supply of electricity. Should nuclear power be immediately abolished, serious electricity shortage would spread worldwide and not only in Japan which has been suffering from electricity shortage since March because operation of Fukushima and recently other nuclear power plants are halted.
The electricity shortage is expected to be a serious problem in summer when electricity use is at one of the peak in the year therefore the country has been making upmost efforts to overcome it by all possible means as mentioned in the previous article 15% Energy Cut without Production Cut – The Japan Disaster as well as planned blackouts in Kanto (e.g. Tokyo, Yokoyama, Chiba) in March but worldwide.
With such a reality, while Japan is expected to terminate the Fukushima nuclear power issue with help and support from around the globe while it is also expected to protect and support its nuclear power engineers and encourage them to leverage their skills and know how for “safe and appropriate use of nuclear power” globally. This is based on mutual help philosophy.
And of course, all countries and parties are expected to get together to make innovation for discovery and/or proliferation of alternative energy while saving energy for sustainability and prosperity of our planet.
In a popular morning TV programme this morning, there was an interesting short discussion on energy policy of Japan, which started with the excerpt of the recent comment of Prime Minister Naoto Kan about “separation of power generation and power transmission”.
The basic idea agreed by the panelists was that Japan is at the verge of change in its energy policy, which requires paradigm shift in the way of thinking, and that vision based on solid philosophy delivered effectively and clearly by the Prime Minister.
1. How has electricity power business in Japan been until today?
Currently, electricity power companies such as Tokyo/Tohoku Electric Power Co., Inc. (TEPCO) have been responsible for both generation and transmission of electricity/power, based on the concept of “stable electricity supply”. In short, it has been of centralization of power supply
Under this situation, electricity power companies allocated by regions of responsibility such as Tokyo/Kanto, Tohoku (north eastern Japan), Chubu (midlands including Aichi where Toyota is located), and Kansai (Osaka, Kyoto, Kobe etc.) have been monopolizing electricity power businesses in their region.
2. What is “separation of power generation and power transmission” and what could it mean?
It is to separate power transmission from power generation.
This means dispersion and diversification of power transmission from centralization. It is quite similar to the ongoing transformation of information by the emergence of the Internet and social media.
It can be also quite similar to what happened in capital by the financial policy change before 2000 that triggered “Financial Big Bang” and reorganization of financial industry/sector in Japan. This was due to implementation of principle of competition and market mechanism in the financial sector.
Separation of power generation and power transmission is expected to implement the same principle in the energy supply sector as well, allowing power supply companies enter the market. It could also mean individuals who generated electricity by such system as solar to provide electricity to the public.
As a result, it is quite possible that citizens would benefit from reduction in their monthly electricity fee payment.
3. Is there any country that implemented this policy with success?
Yes, there is. It is Germany.
As a result of separating power transmission from power generation, the supply of natural energy increased from 6% to 16%. And the country aims to further increase to 30% by 2015 or so.
4. What are other requirements to increase natural energy?
1) Financial support from the government
In the initial stage, support from the government, financial in particular, is required because cost of anything new to the market is extremely high. A good, easy-to-understand example is of AV product of new technology and/or format and the author would like to add the explanation of this mechanism.
For example, when first launched in the market, LCD and plasma flat panel TVs were so expensive that the general public could not afford. But with further technological innovation and others, the cost went down so it became more affordable for more people. The more people buy and use the product, the great the reduction of the price per unit due to reduction in production cost per unit.
And when it reaches a “critical mass”, the product becomes popular all of a sudden, which is usually said that when 16% of the people in the market use the product.
Financial support from the government at the initial stage could speed up the whole process in popularization of natural energy.
2) Vision, roadmap, regulations and systems set by the government
Easy-going approach would only lead to failure of natural energy popularization. Solid energy supply vision, roadmap, regulations and systems to achieve the vision. Not only Germany but all other countries that the government initiated popularization of natural energy developed and implemented them.
3) Environment to drive popularization
There may be many factors for an environment to drive popularization of natural energy. One is the recent popularization of smart grid.
5. What should happen to the nuclear power?
This is a question that provokes a hot discussion. There were interesting comments by a panelist of the TV programme, whom he said is that he is more of a person who has been initiating nuclear power.
That is that Japan is the only country that has been leveraging nuclear power for electricity use only and not for producing atomic bombs (although it is the only victim country from atomic bomb in World War II).
Japan is also a country that has engineers in this realm, and since there are many neighbouring countries that initiate nuclear power generation, Japan is expected to protect the engineers and allow/encourage them so that they can utilize their skills and know how to such countries.
6. What are the author’s final thoughts?
The author is not a specialist in this realm but from general understanding she fully understands what the panelists said and agrees, especially the comment about the nuclear power made at last as conclusion.
It might be ideal to abolish nuclear power immediately; however, it is simply not feasible to do so completely and immediately under current circumstances of power generation; i.e. balance of demand and supply of electricity. Should nuclear power be immediately abolished, serious electricity shortage would spread worldwide and not only in Japan which has been suffering from electricity shortage since March because operation of Fukushima and recently other nuclear power plants are halted.
The electricity shortage is expected to be a serious problem in summer when electricity use is at one of the peak in the year therefore the country has been making upmost efforts to overcome it by all possible means as mentioned in the previous article 15% Energy Cut without Production Cut – The Japan Disaster as well as planned blackouts in Kanto (e.g. Tokyo, Yokoyama, Chiba) in March but worldwide.
With such a reality, while Japan is expected to terminate the Fukushima nuclear power issue with help and support from around the globe while it is also expected to protect and support its nuclear power engineers and encourage them to leverage their skills and know how for “safe and appropriate use of nuclear power” globally. This is based on mutual help philosophy.
And of course, all countries and parties are expected to get together to make innovation for discovery and/or proliferation of alternative energy while saving energy for sustainability and prosperity of our planet.
2011年5月15日日曜日
15% Energy Cut without Production Cut – The Japan Disaster
Osaka - Sunday, May 15, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 14 that parties throughout the industries are to take actions to meet the request of cutting energy use by 15% from the Japanese government and Tokyo/Tohoku Electric Power Co., Inc. The request has been discussed to reach a consensus and was officially announced on May 13.
Actions range from shift in operation days/hours and location to production transfer to implementation of energy saving equipments and systems, with the objective of fulfilling both business continuity and energy saving.
1. What request is made to companies?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped its operation. This made Tokyo Electric Power Co., Inc. unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
1) Request made to companies operating in the area responsible by Tokyo and Tohoku Electric Power
All companies operating in the area that use electricity supplied by Tokyo and Tohoku Electric Power, i.e. eastern Japan, are requested to cut electricity use by 15%.
Plants that produce electronic components used in wide a range of fields including automotive and electronics are concentrated in the area so the request has much meaning.
2) Exceptions
The Japanese government has been studying fields that are to be exceptions because electricity cut is extremely difficult in some cases, such as medical devices. There are some industries that request to be handled as exceptions and the government is currently studying what can be exceptions with extreme care and is to make final decision and announcement by the end of this month.
Examples of the cases/fields that are studied whether to be included as exceptions or not at present are as follows, all of which are those that could severely impact lives of citizens and economic activities. Related ministries and industries are requesting exceptions such as easing the target.
- hospitals
- railway during commuting hours (mornings, evenings)
- sewerage facilities
- refrigerator warehouses
- data centres
2. What actions are planned or studied by companies?
There are mainly 3 kinds of actions and initiatives planned and studied by companies.
1) Shift/change of operating days and hours, and location
(1) Shift some operating days from summer to spring and autumn and winter by Toshiba, Hitachi and Mitsubishi Heavy Industries.
(2) Change plant shut down days by nationwide automobile plants based on the policy by JAMA (Japan Automobile Manufacturers Association, Inc.) to change plant shut down days from weekends to Thursday and Friday.
(3) Operate during the Golden Week Holidays (April 29 – May 8) and instead increase number of days that plants are shut down in summer by Nikon.
(4) Implement summer time by Sony, Sumitomo Metal Industries and Aeon.
(5) Implement work from home system to cut electricity use in offices by NTT Data and Teijin.
2) Transfer of production, equipments and facilities
(1) Transfer production from eastern Japan to western Japan or overseas by Honda, Toray and JFE Steel.
(2) Transfer 30% of servers for development from eastern Japan (around Tokyo) to multiple locations in western and other parts of Japan.
3) Implement energy saving equipments and systems
(1) Replace lights to energy saving ones such as LED by JX Nippon Oil & Energy Corporation, Marubeni and Seven Eleven.
(2) Rotate showing hours of movies at cinema by Shochiku.
(3) Terminate refrigerating hours of vending machines for 5 or 6 hours a day in turn by Coca Cola and other beverage companies.
3. What action is to be taken by Panasonic that enables achieving 15% electricity cut target without changing operation days/hours or transferring production?
1) Solution: installment of sensors to monitor and control electricity use
Panasonic is to install sensors in plants in the area to monitor and control electricity use to obtain data which will be used to streamline electricity use, with the objective of maintaining productivity while achieving the electricity cut target.
2) Benefit from the solution
The solution enable the company to avoid decrease in operating days and hours and transfer of plants so the company can avoid stagnation in its economic activities. This is amazing and can be a best practice when it is estimated that with 15% electricity cut initiative 50,000 jobs will be lost and wage of employees will be cut by 0.2%, leading to reduction of GDP growth by 0.3% in 2011.
It would require total of over 100 million yen investment for this initiative but the company estimates that it can earn back the investment in 3 years. The initiative for the upcoming summer focuses on those of immediate results and improvements will be added continuously next year onwards.
3) Upcoming actions
The sensors will be installed in all 30 plants in the area that produce products such as LCD panels and LCD flat panel TVs. 20 staff members are to start installation one after the other from the week starting May 16. The company is to add analysis and simulation with their unique software to establish a system in which they can continue lean, streamlined production by plants by the end of June.
When the sensors are installed, the company will be able to monitor use of electricity, gas and water, and temperature and humidity by production lines and equipments. The company is to initiate reviewing humidity control in clean rooms, reduction in compressors and short time operation halts in addition to reduction in lights and frequent termination in power.
As a result, the company is confident that it can achieve 15% reduction in electricity use at the peak this summer from last summer and has made agreement with Tokyo and Tohoku Electric Power to be provided with total of 160,000 kW. The company has tried using the sensor in multiple plants in other parts of Japan such as Wakayama.
Resources:-
To fulfill the request from the Japanese government of cutting electricity use by 15%, companies are taking measures to achieve the target such as shift/change of working days/hours and locations, production transfer and implementation of energy saving equipments and systems. An interesting solution by Panasonic is installing sensors in plants to monitor and control electricity use that enable achieving target while avoiding economic activity stagnation by change/shift of working days/hours and production transfer.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 14 that parties throughout the industries are to take actions to meet the request of cutting energy use by 15% from the Japanese government and Tokyo/Tohoku Electric Power Co., Inc. The request has been discussed to reach a consensus and was officially announced on May 13.
Actions range from shift in operation days/hours and location to production transfer to implementation of energy saving equipments and systems, with the objective of fulfilling both business continuity and energy saving.
1. What request is made to companies?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped its operation. This made Tokyo Electric Power Co., Inc. unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
1) Request made to companies operating in the area responsible by Tokyo and Tohoku Electric Power
All companies operating in the area that use electricity supplied by Tokyo and Tohoku Electric Power, i.e. eastern Japan, are requested to cut electricity use by 15%.
Plants that produce electronic components used in wide a range of fields including automotive and electronics are concentrated in the area so the request has much meaning.
2) Exceptions
The Japanese government has been studying fields that are to be exceptions because electricity cut is extremely difficult in some cases, such as medical devices. There are some industries that request to be handled as exceptions and the government is currently studying what can be exceptions with extreme care and is to make final decision and announcement by the end of this month.
Examples of the cases/fields that are studied whether to be included as exceptions or not at present are as follows, all of which are those that could severely impact lives of citizens and economic activities. Related ministries and industries are requesting exceptions such as easing the target.
- hospitals
- railway during commuting hours (mornings, evenings)
- sewerage facilities
- refrigerator warehouses
- data centres
2. What actions are planned or studied by companies?
There are mainly 3 kinds of actions and initiatives planned and studied by companies.
1) Shift/change of operating days and hours, and location
(1) Shift some operating days from summer to spring and autumn and winter by Toshiba, Hitachi and Mitsubishi Heavy Industries.
(2) Change plant shut down days by nationwide automobile plants based on the policy by JAMA (Japan Automobile Manufacturers Association, Inc.) to change plant shut down days from weekends to Thursday and Friday.
(3) Operate during the Golden Week Holidays (April 29 – May 8) and instead increase number of days that plants are shut down in summer by Nikon.
(4) Implement summer time by Sony, Sumitomo Metal Industries and Aeon.
(5) Implement work from home system to cut electricity use in offices by NTT Data and Teijin.
2) Transfer of production, equipments and facilities
(1) Transfer production from eastern Japan to western Japan or overseas by Honda, Toray and JFE Steel.
(2) Transfer 30% of servers for development from eastern Japan (around Tokyo) to multiple locations in western and other parts of Japan.
3) Implement energy saving equipments and systems
(1) Replace lights to energy saving ones such as LED by JX Nippon Oil & Energy Corporation, Marubeni and Seven Eleven.
(2) Rotate showing hours of movies at cinema by Shochiku.
(3) Terminate refrigerating hours of vending machines for 5 or 6 hours a day in turn by Coca Cola and other beverage companies.
3. What action is to be taken by Panasonic that enables achieving 15% electricity cut target without changing operation days/hours or transferring production?
1) Solution: installment of sensors to monitor and control electricity use
Panasonic is to install sensors in plants in the area to monitor and control electricity use to obtain data which will be used to streamline electricity use, with the objective of maintaining productivity while achieving the electricity cut target.
2) Benefit from the solution
The solution enable the company to avoid decrease in operating days and hours and transfer of plants so the company can avoid stagnation in its economic activities. This is amazing and can be a best practice when it is estimated that with 15% electricity cut initiative 50,000 jobs will be lost and wage of employees will be cut by 0.2%, leading to reduction of GDP growth by 0.3% in 2011.
It would require total of over 100 million yen investment for this initiative but the company estimates that it can earn back the investment in 3 years. The initiative for the upcoming summer focuses on those of immediate results and improvements will be added continuously next year onwards.
3) Upcoming actions
The sensors will be installed in all 30 plants in the area that produce products such as LCD panels and LCD flat panel TVs. 20 staff members are to start installation one after the other from the week starting May 16. The company is to add analysis and simulation with their unique software to establish a system in which they can continue lean, streamlined production by plants by the end of June.
When the sensors are installed, the company will be able to monitor use of electricity, gas and water, and temperature and humidity by production lines and equipments. The company is to initiate reviewing humidity control in clean rooms, reduction in compressors and short time operation halts in addition to reduction in lights and frequent termination in power.
As a result, the company is confident that it can achieve 15% reduction in electricity use at the peak this summer from last summer and has made agreement with Tokyo and Tohoku Electric Power to be provided with total of 160,000 kW. The company has tried using the sensor in multiple plants in other parts of Japan such as Wakayama.
Resources:-
To fulfill the request from the Japanese government of cutting electricity use by 15%, companies are taking measures to achieve the target such as shift/change of working days/hours and locations, production transfer and implementation of energy saving equipments and systems. An interesting solution by Panasonic is installing sensors in plants to monitor and control electricity use that enable achieving target while avoiding economic activity stagnation by change/shift of working days/hours and production transfer.
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