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Moving Forward With the Community Five months after the disaster, SMES are in the midst of recovery | Satoshi Shinohe, Deputy Director Press Division Iwate Nippo Co., Ltd. [Date of Issue: 31/August/2011 No.0198-0808]

Date of Issue:31/August/2011

Moving Forward With the Community
Five months after the disaster, SMES are in the midst of recovery

Satoshi Shinohe
Deputy Director
Press Division
Iwate Nippo Co., Ltd.


Close to 2,000 companies along the coast of Iwate Prefecture suffered flood damage as a result of the Great East Japan Earthquake, causing massive damage to their manufacturing and business bases. However, five months after the disaster, the road to restoring and rebuilding business is gradually opening up. Here we look at companies seeking to play their part in the rebuild of their home towns by helping local residents in close contact with the community.


The March disaster left 1,954 companies with flood damage, causing economic losses of 412.1 billion yen (sales base, maximum value) and threatening job losses for around 20,000 people.

These were the damage figures emerging from a survey undertaken by Tokyo Shoko Research Ltd., a major private credit reporting firm, of companies on the coast of Iwate Prefecture, which was flooded by the tsunami following the Great East Japan Earthquake.

More than half (55 percent) of firms with headquarters on the coast were flooded. The tsunami severely battered the fishing industry, a key Iwate industry, and indeed all production and living infrastructure, while business managers too were hard hit both mentally and physically.

But somehow, five months have now passed. In ports, industrial parks and shopping streets in the affected areas, numerous small and medium enterprises (SMEs) are beginning to make steady progress toward recovery.

Ishimura Industry Co., Ltd. operates a plant in the Kamaishi Steel Industrial Estate in Ohira-machi in Kamaishi City. On 11 March, a 10-meter tsunami wave rammed the company office and factory, both of which face on to Kamaishi Port. Outer building walls received massive damage and welding machines, coaters and other machinery and equipment vital to production were rendered useless. The office block remains on an angle even now.

The company president, 58-year-old Shinichi Ishimura, also had his own house totally destroyed. On the day of the disaster, he sat in the pitch darkness of a shelter asking himself whether he should throw in the towel. It was the only time, before or after, that he lost heart. Three days later, he set the goal of restoring operations by late May.

His 18 staff, all highly skilled in fields such as electrical engineering and construction, came through the disaster safely, and the eight cranes too were undamaged. The key factor in Ishimura’s decision to stage such an early return to operations was his pride in his company’s products—a pellet stove and a machine that agitates and salt-cures wakame.

For many years after its establishment in 1959, the company had simply filled orders for a large steel firm in town. However, more than 20 years ago when the steel firm closed down its blast furnaces, with no more work coming in, Ishimura Kogyo had to change its business.

Through a process of trial and error, the company focused its resources on developing its own products. Ten years ago, the company commercialized a pellet stove that would help prevent global warming and boost the forestry industry. Then in 2009, it started to sell a salt-curing machine to ease the work of local cultivated wakame producers.

With the factory back in operation since late May as scheduled, inside the plant is even more active as it was before the disaster. Because Ishimura’s pellet stoves don’t use power and can also burn the wood debris created by the tsunami, the protracted power shortages caused by the disaster have caused the popularity of the stoves to soar, pushing May and June orders up to around five times the usual level. Requests for machinery repairs are also increasing from local fishing product processors who have heard about the plant re-opening.

With land use regulations yet to be determined, companies still don’t know whether their plants along the coast will be able to continue operating or whether they will be able to collect on outstanding bills. According to Shinichi Ishimura, however, the appreciation of local residents is a real source of motivation and he wants to hire and train young people to make sure that people stay in Kamaishi. The firm is deeply committed to contributing to Kamaishi’s restoration by undertaking work that helps local residents.

The area around the Ishimura plant is swallowed by the tsunami (rear of photo) Photo credit: Shinichi Ishimura

The area around the Ishimura plant is swallowed by the tsunami (rear of photo)
Photo credit: Shinichi Ishimura


The tsunami strewed production facilities, resources and materials around the Ishimura plant, seriously damaging walls. By securing secondhand machinery and with the support of customers, the firm managed to resume operations in late May. (Ohira-machi, Kamaishi City)
Photo credit: Shinichi Ishimura

The tsunami strewed production facilities, resources and materials around the Ishimura plant, seriously damaging walls. By securing secondhand machinery and with the support of customers, the firm managed to resume operations in late May. (Ohira-machi, Kamaishi City) Photo credit: Shinichi Ishimura


***
According to an Iwate Prefecture survey of 228 manufacturers located on the coast, nine percent of damaged firms expect to go out of business. Even where plants have been totally destroyed or washed away, most firms are expecting to be able to get their business back up and running. However, with a number of obstacles along the way, including securing land and capital, they are also engaged in a fight against time.

Where the government has allocated 7.9 billion yen, the amount of assistance sought is 54.5 billion. The subsidy scheme operated jointly by the national government and prefectural authorities for SMEs and other groups seeking to rebuild originally offered a high 75 percent subsidy of the rebuilding cost, and companies rushed to take up this generous offer. As a result, to provide the broadest possible support, authorities were forced to turn around and cut that subsidy rate to around 25 percent.

Companies were furious at the change, which they said represented such a different deal to what they had originally been offered that they would be forced to scale back their reconstruction plans. The national and prefectural governments have subsequently instituted additional budgetary measures, but there is clearly a budget shortfall.

While there are also financing schemes available, taking that option would double the loan burden for affected firms which already have debts, so subsidies that do not require repayment are obviously extremely attractive. Basically, the national government acted irresponsibly in designing an inadequate scheme?including failing to set a ceiling on subsidy applications?while it still had an insufficient grasp of the scale of damage and capital demand, resulting in widespread confusion.

***
Embankments crumpled out of shape by the power of the massive tsunami are piled high with town debris. Following the disaster, the previously bustling and prosperous coastline called forth only sighs. Rebuilding the affected area is synonymous with rebuilding the fishing industry. While the horizon is far from clear, a youthful strength is employing unique methods to restore the fishing industry.

Kenichiro Yagi, the 34-year-old president of Sanriku Toretate Ichiba, an Internet-based fish market physically located in the Okirai area of Sanrikucho in Ofunato City, is convinced of the universal value of Sanriku, one of the world’s three great fishing areas. He believes that the tsunami ‘reset’ the ocean, getting fish on the move and consequently assuring catches for the fishing industry for the next 100 years.

Yagi is working with 10 staff around the same age as himself to procure freshly caught fish through direct transactions with fishermen and from markets and then selling them all over the country via the Internet.

The tsunami wiped out the company’s entire Internet setup, including the office, warehouse and server. The firm was also impacted by the initially assumed total destruction of the fishing industry, which is of course based on catching, landing and buying fish.

That’s when Yagi found out about the unexpected change in the underwater environment. While it is great news for fishermen, Yagi stresses that if fishing just goes back to pre-March 11 conditions, the coastal area will fade away.

Conditions are harsh for the fishing industry, including the graying of fishermen, the lack of successors and falling fish prices. Yagi’s concern is that ‘restoration’ alone will leave coastal towns without a future.

Fishermen put their lives on the line, believes Yagi, and consequently he wants to make fishing into a thriving business and industry for those fishermen, and also create jobs. With Internet sales back up and running, Yagi is using a government scheme for emergency employment creation to take on three fishermen to assist his effort to fuse fishing with, for example, traditional cuisine.

Back in operation in a prefab office. Convinced of the value of the Sanriku fishing grounds, company president Kenichiro Yagi (center) aims to rebuild the fishing industry. (Okirai, Sanriku-cho, Ofunato City)

Back in operation in a prefab office. Convinced of the value of the Sanriku fishing grounds, company president Kenichiro Yagi (center) aims to rebuild the fishing industry. (Okirai, Sanriku-cho, Ofunato City)


***
In the midst of hardship and confusion, manufacturing and fishing firms and many other companies in the affected area are fighting hard to get their businesses back into operation. While this task is vital for their survival, it is also an expression of their love for their local community and their resolve to continue moving forward together with that community. What they need politicians and bureaucrats to do is take an accurate reading of the current situation and move boldly ahead with measures that embrace this drive among business-owners and support them in their endeavors.

(original article : Japanese)
(For the Japanese version of this article)


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