Mon, May 16, 2011 - Page 9 News List

Japan’s society ponders finding a new normal

By Hiroko Tabuchi  /  NY Times News Service, ISHINOMAKI, JAPAN

Its factory wiped out by the tsunami, a maker of vital parts for smartphones said it will move production overseas.

Their boats washed away, fishermen in the town of Higashi-Matsushima, Japan, said they will start over, but on a smaller scale.

And with electricity still scarce from the Fukushima Dai-ichi nuclear power plant crisis, a landmark building in Tokyo has dimmed its famous lights.

Across Japan, there is a shared realization that the natural and nuclear disasters unleashed on March 11 have exposed the fragility of its postwar economic order — and that a recovery will not be a return to the status quo.

The disasters have dealt another blow to a manufacturing sector already hurt by cheaper rivals, hastening a “hollowing out” of Japanese industry long feared in this country.

Japan’s aging, shrinking population will also make an energetic bounce-back more difficult.

And Japan’s economy relies heavily on precarious nuclear energy, for which alternatives will be more expensive.

Rebuilding will require a national rethinking if Japan is to achieve an economic rebirth, rather than slip further into the stagnation that has plagued it for two decades, experts say.

“We cannot have recovery for recovery’s sake,” said Hiroko Ota, a former Japanese economic minister and vice president at the National Graduate Institute for Policy Studies. “We must make this the starting point for a new economy.”

Japan is no stranger to rebuilding. Its economy largely shook off the effects of a disastrous quake that struck the city of Kobe in 1995, thanks to an all-out recovery effort.

However, compared with the Kobe crisis, it is a weaker nation that now faces the task of reconstruction.

The average age for the population has advanced since then by about six years — to 44.6 years in 2009 — which weighs on economic growth. The country is saddled with a public debt more than twice the size of its economy. And it has gone from being Asia’s unrivaled economic powerhouse to a perennial underachiever.

With at least 25,000 dead and trillions of yen in damage, as well as the stricken Fukushima Dai-ichi nuclear plant still releasing radiation, the calamity has been overwhelming.

“This is an unprecedented disaster,” said Takayoshi Igarashi, a politics professor at Hosei University in Tokyo and a member of a council the government has asked to draft a long-term reconstruction plan. “Japan is at a crossroads.”

So, it seems, is Japanese manufacturing.

Take Meiko Electronics, which supplies circuit boards to some of the world’s biggest makers of smartphones, including Apple. The tsunami ravaged Meiko’s most sophisticated circuit board factory, which is in Ishinomaki, mangling machines and sweeping a mountain of debris onto the factory floor.

Meiko already makes 80 percent of its parts overseas. Now, with the damage to two of its five Japanese factories — and the uncertainties of Japan’s power supply — it does not make sense to rebuild in the country, company spokesman Hidetaka Maruyama said.

A new factory in Wuhan, China, completed last month, has already started producing many of the most sophisticated Meiko circuit boards once made in Japan.

“Without a doubt, there will be a shift toward production overseas,” Maruyama said.

To be sure, government surveys show that many manufacturers have rebounded quickly in the quake’s aftermath. Still, analysts say that even a short hiatus in Japanese output and electricity disruptions are enough to give overseas competitors an edge. The disaster has also shown that even some of the country’s biggest multinationals, such as Toyota, remain dangerously dependent on domestic suppliers — a realization that could spur more corporations to move production offshore.

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