Firms fear summer slump over power cuts

by Harumi Ozawa

AFP-JIJI

Manufacturers are expecting a long summer as businesses that make everything from ice cream to crayons fret over potential production slowdowns stemming from the nuclear-free nation’s loss of generation capacity.

A hot summer would usually be welcome news for Ezaki Glico, a major snack and ice cream maker. But looming power shortages could leave it unable to meet demand.

“If the temperature goes up very high this summer, and if the government asks us to cut electricity consumption a lot, our ice cream business will be seriously affected,” an Ezaki Glico spokesman said.

“We may have to make more ice cream before” the power shortages peak, he added.

Two weeks after the last working nuclear reactor was shut down as a result of the Fukushima nuclear crisis, the energy-hungry nation is struggling to figure out how to bridge the gap. While the government has not yet issued a target for industrial power cuts, significant reductions appear certain and could reportedly climb as high as 20 percent in the Kansai region, which includes the commercial hubs of Osaka, Kyoto and Kobe.

The world’s worst nuclear accident in a generation, sparked by a devastating quake and tsunami in March 2011, turned public sentiment against nuclear power, which supplied one-third of the import-dependent nation’s electricity.

That has stoked a search for expensive alternatives, with utility Kansai Electric last month booking a $3 billion annual loss from reviving its mothballed thermal power plants, which burn fossil fuels.

To be fired up again, nuclear power stations must now pass computerized stress tests and gain consent from their host communities. And it is this last hurdle that is proving hardest to overcome.

Energy shortage fears are rippling across the nation, with Hiromasa Yonekura, chairman of the Japan Business Federation, repeatedly warning that the economy “would collapse” if none of the 50 viable reactors is restarted.

With the government reportedly set to seek a 20 percent reduction in power consumption in Kansai, some firms are worried.

When offices and factories in the region slashed power use by about 15 percent last summer, it proved barely doable for many, including Osaka-based crayon maker Sakura Color Products.

“We had a bare minimum of lights on while turning off about half of the computers and elevators at our offices,” a spokesman said.

This year, the crayon producer is eyeing a variety of coping measures, including moving some production to China.

“We are considering producing more in advance or even shifting part of the production to our plant in Shanghai and importing back from there,” the spokesman said. “Otherwise, we won’t be able to cut as much as 20 percent of our power use.”

Utilities in Hokkaido and Kyushu also fear they will struggle to provide enough power to keep the lights on as air conditioning gets cranked up during what may be a sweltering summer. The government is considering asking those regions to cut electricity use by about 10 percent, newspaper reports said.

Satoshi Osanai, economist at Daiwa Institute of Research, said domestic manufacturers who barely coped with the power crunch last summer may be in for an even tougher time as the mercury climbs over the next couple of months.