Miyagi’s Manufacturing Firms
Battling Indomitably to Restore Operations
Battling Indomitably to Restore Operations
Kahoku Shimpo Publishing Co.
Miyagi Prefecture suffered the greatest number of deaths from the Great East Japan Earthquake. The massive tsunami dealt a painful blow not just to people’s daily lives but also to the region’s manufacturing firms. However, companies have been battling indomitably toward recovery, and they are once again on the verge of a powerful drive forward.
The signboard bearing the company name is buried in a massive pile of debris. The factory floor is deep in mud. Machinery on automated production lines is draped in seaweed and garbage.
Kyowa Aluminium, located in the industrial city of Iwanuma on the coast of Miyagi Prefecture, specializes in surface-processing the aluminium parts used in electronic machinery and cars. The company’s plant, which was in an industrial park right on the coast, was devastated by the tsunami following the Great East Japan Earthquake on 11 March.
Company president Kozo Inoue ordered his 30 staff out immediately after the quake but stayed behind himself, leaving it too late to escape the premises. He barely made it to an office on the plant’s second floor, from which he watched a tide of black water approach. The water level reached four meters, completely submerging the first floor of the building where production machinery was clustered.
His mobile phone wouldn’t ring through, and there was no point calling out for help. The power had gone out and his surroundings were gradually submerged in darkness. “Where will we operate tomorrow?” Isolated and confronted with a desperate scene, Inoue’s thoughts went not to his personal safety, but rather to continuing operations.
Because of the special processing required by aluminium materials, there aren’t many manufacturers in Miyagi Prefecture that handle aluminium. Inoue decided almost immediately that he couldn’t leave waiting the customers who had entrusted him with their parts processing. At the end of March, he sent some of his staff to a factory partner in Nagano Prefecture more than 300 kilometers away and borrowed equipment to resume operations.
In April, Inoue managed to borrow a corner in a customer’s factory in Miyagi Prefecture. Cleaning tanks and other pieces of equipment were gathered from the Iwanuma factory where the water had receded and a provisional production line was set up, with some staff sent there too to handle production.
Even the space borrowed in these two facilities together is nowhere near sufficient for production to reach pre-disaster levels, but Inoue feels no despair. He is determined to get the Iwanuma factory back up and running and bring his staff home. He has already secured power boards and other equipment and his eyes are fixed on recovery.
Automobiles are made up of some 30,000 parts, and cannot be completed in the absence of even one of these. Regardless of the size of the business, if even one subcontracting firm is running late, the finished vehicle lines of massive manufacturers can grind to a halt. To protect Japan’s auto production, Miyagi’s auto-related companies are refusing to flinch in the face of unprecedented damage, but are instead directly confronting the dual challenges of restoration work and continuation of production.
Iwaki Diecast, which makes diecast parts for drive system units for Toyota and Honda, is one such company. The firm had three factories in Yamamoto-cho on the coast of Miyagi Prefecture, but the one nearest the coast was completely swept away. The main factory’s location on higher ground enabled it to escape tsunami damage, but its 20 aluminium melting furnaces—core pieces of equipment—were damaged by power failure.
At the time of earthquake, company president Yoshio Saito was not at the factory. When a report on the state of the factory came through, he was struck by the sheer scale of the damage.
His first concern was the impact on customers. With production equipment out of commission, there was no way to meet deadlines. He decided to take the firm’s dies to other companies and contacted clients immediately to give them the names of other firms that could do the work.
Dies combine the technologies of a number of companies and are a central tool in parts mass production. Giving them to other firms is tantamount to disclosing the knowhow which a firm has built up. Even if the factory did recover, there was no guarantee that work would come back from the alternative manufacturers. But Saito didn’t hesitate.
Looking back, Saito recalls that he was more afraid of the impact on the auto manufacturing industry as a whole than of the loss to his company. He worked to minimize the impact on customers by organizing production elsewhere even as he hurried to repair his own factories, including installing generators to restore lost power.
Farming and fishing have long been core industries in north-eastern Japan, Miyagi Prefecture included. In recent years, local governments have been using cheap land prices and cheap wages to attract factories, gradually moving the region toward industrialization. While not many well-known manufacturers have their headquarters there, the region has underpinned Japan’s drive to carve its place in the world economy through technology, supplying parts particularly to the electronics and auto industries.
As of 5 July, 9,293 people have been confirmed dead in Miyagi Prefecture as a result of the March disaster. Some 4,617 people are still missing. The Tohoku branch of the Development Bank of Japan estimates damage to manufacturing facilities and buildings in Miyagi Prefecture at around 438 billion yen. Immediately after the quake, a state of turmoil sufficiently severe to paralyze even administrative functions foreshadowed the difficulty of rebuilding manufacturing firms. However, as epitomized by Kyowa Aluminium and Iwaki Diecast, firms have been staging remarkably rapid recoveries, pressing on toward the normalization of production. While the disaster caused many tragedies, it was also an opportunity for the local manufacturing industry to demonstrate its management integrity and stress on relations of mutual trust, as well as its strong determination not to be beaten by adversity.
At the same time, the disaster has wrought a change among local firms.
In the restoration process, there have been many instances of customers providing operational space and machinery to affected companies, and there have even been cases where they have sent in large numbers of staff to provide direct support for recovery work. This mutual support among manufacturing firms has in some cases gone beyond the bounds of capital and business relations.
Iwanuma Seiko, which makes parts for electronic machinery and other products in Iwanuma City, had all of its production equipment put out of commission by the tsunami. When Iwanuma Seiko was exploring ways to resume production, Asahi Kinzoku Kogyo, a company from the same industry that operates out of neighboring Yamagata Prefecture, offered the use of its facilities. The leaders of these two companies didn’t even know each other, but what connected them was the fear that the disaster would accelerate the offshore shift of manufacturing and hollow out domestic industry.
According to Asahi Kinzoku Kogyo leader Yoshiki Yokosawa, their rivals are not now other Japanese manufacturers in the same industry, but rather offshore manufacturers. Local SMEs need to combine their strengths to survive.
With small and medium-sized manufacturers vying for a limited amount of subcontracting work, one company’s success can mean another company’s failure. As a result, horizontal links among companies haven’t developed in the same way as in primary industries such as agriculture and fishing. However, faced with the emergency situation of a disaster, manufacturers are beginning to prioritize cooperation over competition.
Some pundits have pointed to the new possibilities for Miyagi’s manufacturing industry that could arise out of this new trend in the world of industry.
Toshikazu Nozawa, an assistant professor at the Tohoku Institute of Technology who is involved in industry-university partnerships, notes that with all of industry currently focused on the task of rebuilding after the disaster, this is the perfect opportunity for partnership. If the various firms’ technologies are combined, it should not be impossible to create new industries. He envisages alliances of small and medium enterprises developing new products. Simply restoring the status quo, he says, will not produce growth. Rather than focusing on subcontracting work, firms need to transform themselves into manufacturers who can sell products under their own brand, and the March disaster provides that opportunity.
The tsunami swept away lives, assets and everything else before it, but failed to break the spirit and pride of manufacturing firms. There is a saying that adversity makes companies stronger—meaning that the creativity and innovation needed to surmount difficulties strengthen a company’s backbone. When local firms overcome this disaster, which has been described as a once in a thousand years occurrence, they will be extremely well-positioned for a giant leap forward. Light is beginning to appear at the end of the tunnel.