Business Week International International Business: Japan
DAY OF THE TROUBLESHOOTER (int'l. editions)
At Hosiden Corp., a Kobe-based maker of liquid crystal displays, technicians worked through the weekend to rejigger delicate equipment that had been jostled but not damaged by the Jan. 17 earthquake. The factory was ready to roll by Jan. 24, but Hosiden, which supplies screens to such American companies as Compaq, Apple, and Boeing, was only running at 30% capacity. The problem? Not enough water. "We have water, but only a trickle. That's our biggest concern," says Tatsuyuki Maeda, a Hosiden engineer.
Hosiden's story is typical, and that may bode a speedy recovery for local industry. Kobe is dotted with largely unscathed factories that can't operate at full steam because of damaged infrastructure. Many, like Hosiden, can't get water. Others, like Toyota Motor Corp., can't get enough parts because of damaged roads. But water should be running as usual in two to three weeks, and companies are figuring out ways around the transportation bottlenecks. The cost to Kobe in life and property was steep, but industrial capacity is temporarily hemmed in, not wrecked.
MECHANICAL GODZILLAS. The city seems bent on rapidly restoring its utilities, railroads, and highways. A walking tour just a week after the killer quake shows Kobe swarming with heavy equipment as construction companies move in to rebuild. Residents are out in force to gawk at a dozen giant cranes fitted with hydraulic jaws that are, one bite at a time, pulverizing a long section of elevated road that toppled over. It's slow work but won't take more than a week, and it will open a few lanes underneath.
That is not to say that companies aren't taking a hit. Procter & Gamble Co.'s factory in Akashi, 16 kilometers west of Kobe, won't be running full tilt for a month because the floor buckled in several places. The company airlifted 166 employees and their families to Hong Kong in the meantime. At Matsushita Electric Industrial Co.'s Osaka distribution center, thousands of video recorders and appliances were tossed off shelves and damaged beyond repair. And Chrysler Corp. may have to wait months for 10,000 engines made by Mitsubishi Motors Corp. that are stranded on Kobe's docks. Mitsubishi says it may eventually ship the undamaged engines out of Kobe's port by truck to another port or fill the order with new engines.
But to put the damage in perspective, consider the boost Kobe and surrounding Hyogo Prefecture will get from rebuilding--$200 billion worth of construction, at conservative estimates. That's roughly equal to three month's industrial output from the region. Furthermore, Japan's factories are plodding along at 74% of capacity, so it will be easy to take up the slack. For most big companies, stoppages just weren't large enough to make much of a dent. Toyota, for example, lost production of 20,000 cars because of delayed deliveries of brake calipers and audio gear. But, says President Tatsuro Toyoda, "we can make up for the lost production by adding three shifts on some weekend."
BUSY DRIVERS. And already many companies are coming back on line. Hmnda restarted its motorcycle plant in Hamamatsu on Jan. 24 after shutting down for one day because Sumitomo Rubber Industries Ltd. had stopped supplying certain tires. Honda simply changed the product mix to match available tires.
Others are finding ways to get around snagged freight routes. Omron Corp., a maker of electrical components, has resumed exports after a brief hiatus by switching surface shipments to Tokyo from the Kobe port. The company's furnaces got off lightly, even though its Kobe research center had to be abandoned because the third floor caved in. At Kobe Steel Ltd.'s harborside Kakogawa Works, 48 kilometers west of Kobe, four of five unloaders were toppled, but the company is hustling to lease or buy replacements.
Meanwhile, Nippon Express Co., Japan's largest trucker, which reassigned almost 900 trucks to Hyogo just to carry emergency supplies, says drivers are working double the normal hours to move goods along bypass routes. Sea routes are also teeming with traffic as shippers work overtime to leapfrog Kobe. With reconstruction already under way and a little more hustle from companies in sidestepping disruptions, the blow to Hyogo's output may prove to be far from a knockout punch.By Larry Holyoke in Kobe