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Reaching Toward Recovery The Nuclear Accident and Fukushima Business and Industry | Shinji Yasuda, Deputy Chief Editorial Bureau Fukushima Minpo Co., Ltd. [Date of Issue: 30/September/2011 No.0199-0812]

Date of Issue:30/September/2011

Reaching Toward Recovery
The Nuclear Accident and Fukushima Business and Industry

Shinji Yasuda
Deputy Chief
Editorial Bureau
Fukushima Minpo Co., Ltd.

Six months have passed since the Great East Japan Earthquake. The situation at the Fukushima Daiichi Nuclear Power Plant appears no closer to resolution, and both industry and business in Fukushima Prefecture where the plant is located are struggling to deal with suspended operations, slumping business performances and reputational damage as a result of the nuclear accident. Central and local government support for companies and compensation from TEPCO have been less than satisfactory, with companies forced to work toward recovery under very difficult conditions.

Of the three prefectures most extensively damaged by the Great East Japan Earthquake—Fukushima, Iwate and Miyagi—the recovery of Fukushima Prefecture in particular will hinge on resolution of the situation at the Fukushima Daiichi Nuclear Power Plant. While the occurrence of an explosion or any serious incident is now regarded as unlikely, the reactors and other facilities have yet to be stabilized. Even if the nuclear reactors were to be successfully shifted into a stable cold shutdown state, cleaning up highly radioactive debris and removing the radioactive substances scattered throughout the prefecture will still take an immensely long time.

Both Fukushima Prefecture and the Tokyo Electric Power Company (TEPCO) have seen their consultation service counters inundated daily by complaints from companies about business cancellations, falling orders and price slumps in the face of reputational damage. Some firms are seeking compensation for the major drop-off in business following the nuclear accident, while others want to know if they can claim compensation for plummeting product prices. Local companies are bringing products in to Fukushima High-Tech Plaza in Koriyama City to find out whether they are carrying radioactive material.

A garment manufacturer located in the evacuation zone was given special government permission to continue its operations within the zone. While the company has emphasized that the minimal airborne radioactive material within the plant means that its products are quite safe, its customers have still requested that it manufacture outside the evacuation zone. Noting that the company’s products aren’t carrying sufficient radioactive material to affect the human body, a senior executive bemoans the inadequacy of government permission as a guarantee of safety. The government’s failure to establish a clear position has indeed exacerbated reputational damage.

Tourism, one of Fukushima Prefecture’s main industries, has also been heavily impacted. Every year over May and June, huge numbers of school children from outside the prefecture come to the Tsurugajyo area in Aizuwakamatsu City on school trips. This year, however, there were hardly any children to be seen even in the middle of the season. Last year around 200 schools had visited the area by the end of May for the early spring season, but by late May this year, only some 30 schools had appeared. Despite the low radiation levels, caregivers aren’t prepared to give permission for their children to make trips to Fukushima Prefecture. The tourism industry is far-reaching, including souvenirs, the buses and trains that tourists travel on, hotels and inns, and also food, and the shadow of the nuclear accident is falling across all of these.

Fukushima Prefecture did have a major tourism campaign scheduled for 2012, and preparations were supposed to get into full swing this year. Alongside the usual group tours, the plan included new efforts to exploit in the travel industry regional resources such as Fukushima City’s increasingly popular Mt. Hanami and Iwaki City’s marine products. The March quake and the nuclear accident have forced around 300 businesses in the category of supply-side tourism to scrap their plans.

Finding themselves in unprecedented difficulties, Fukushima Prefecture’s business and industry are seeking compensation from the government and TEPCO. On 30 August, TEPCO announced compensation payment standards based on the midterm guidelines created by the Ministry of Education,Culture, Sports, Science and Technology’s Dispute Reconciliation Committee for Nuclear Damage. For example, for damage in the processing and distribution industries resulting from government restrictions on shipments, the amount of income lost will be calculated by setting the expected price against the lost sales volume. Reputational damage will be calculated by subtracting the rate of decline in sales from gross profit. For exports, the cost of inspections and issuance of the various types of certification requested by other countries, etc., will be covered. Income lost as a result of product disposal or resale, or through abandoned production, will be calculated based on contract details, etc.

Companies based in Fukushima Prefecture have welcomed the inclusion of reputational damage in the TEPCO standards, but wonder exactly how far they will be compensated for damage. Some have suggested that the scope of reputational damage is too vague, calling for flexible compensation based on companies’ actual circumstances.

As at 30 August, TEPCO had made provisional payments of around 7.8 billion yen to approximately 6,700 people from the danger zone around the nuclear power plant. The power company will soon start paying out full compensation based on the compensation payment standards. Fukushima Prefecture and 59 cities, towns and villages as well as 120 industrial associations within the prefecture have set up a council to address nuclear damage, aiming to get compensation for all types of damage suffered by Fukushima Prefecture residents as a result of the power plant accident. With companies within the prefecture putting forward numerous requests and complaints in relation to TEPCO’s payment standards, compensation payments will remain a major issue in the drive toward recovery.

Despite uncertainty over future prospects, some firms are taking new steps forward. A ground-breaking ceremony was held on 1 September for the Shin-Shirakawa Data Center to be built and operated by domestic Internet service major Yahoo and companies in the Yahoo group, launching the first phase of building. Fukushima Prefecture Governor Yuhei Sato attended the ceremony, noting with pleasure that the new center would be a chance to erase reputational damage. He hoped that the prefecture as a whole would welcome Yahoo and take the occasion of the new center’s construction as the beginning of the prefecture’s reconstruction. Even in the area around the nuclear power plant, companies are beginning to move proactively. For example, a precision plastic products manufacturer that was operating in the danger zone has secured factory space outside the zone, bringing across production equipment used before the disaster to resume operations.

The ground-breaking ceremony of the Shin-Shirakawa data center / Shirakawa city, Fukushima

The ground-breaking ceremony of the Shin-Shirakawa data center / Shirakawa city, Fukushima

Fukushima Prefecture has also been operating a special support program for small and medium enterprises aiming to get back on their feet. Assistance is provided for resumption of operations using empty factories and stores and for rebuilding or repairing facilities. The program has received 1,400 applications, and plans to provide around 6.7 billion yen in assistance. Applications closed previously, but strong pressure to continue the project has persuaded authorities to consider reopening the scheme to further applications.

Recovery from the March quake and the nuclear accident has only just begun, and prospects are still unclear. When Prime Minister Yoshihiko Noda came into power, he stated that there would be no recovery for Japan without the recovery of Fukushima. Business and industry in Fukushima Prefecture look forward to the government taking the Prime Minister at his word and moving swiftly and actively toward Fukushima’s recovery.

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

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