80% of 3/11 disaster-hit firms back at work, though sales remain sluggish: survey

JIJI

Some 80 percent of companies that were hit by the March 2011 tsunami in Iwate, Miyagi and Fukushima prefectures have resumed operations, excluding those in evacuation zones near Tokyo Electric Power Co.’s stricken Fukushima No. 1 nuclear power plant.

However, finding new markets is a major challenge, with the proportion of companies whose sales have returned to pre-disaster levels below 50 percent.

The proportion of tsunami-hit companies that have fully or partially restarted operations reached 80 percent in Miyagi as of the end of March 2015, and 75 percent in Iwate as of Aug. 1, the prefectural governments found in their surveys of industry associations in coastal municipalities.

The rate stood at 55 percent as of June 20 in 12 municipalities in evacuation zones near the Fukushima No. 1 plant, which was heavily damaged by tsunami caused by the magnitude-9.0 earthquake on March 11, 2011. But the proportion was above 80 percent in Fukushima coastal areas outside the evacuation zones.

To support small firms’ reconstruction, the central government has launched a program providing subsidies to businesses that resume operations as a group.

Using the subsidy program, four small shipbuilders in the city of Kesennuma in Miyagi Prefecture established a new company, called Mirai Ships Inc., in May last year to integrate their businesses, aiming to launch operations in 2019.

Spending ¥10.5 billion, Mirai Ships is constructing a new shipyard.

“We need to maintain the shipbuilding industry in Kesennuma, even if the names of the individual companies disappear,” said Takeyoshi Kidoura, president of Mirai Ships and head of one of the four shipbuilders.

All four companies have a history of more than 60 years, but decided on their integration under Mirai Ships as the business environment changed dramatically after the disaster hit. “Mirai” means future in Japanese.

According to a survey by the Ministry of Economy, Trade and Industry’s bureau in the Tohoku region, sales have returned to pre-disaster levels at only 45 percent of companies that received subsidies under the program in Iwate, Miyagi and Fukushima prefectures as well as Aomori Prefecture, which borders Iwate.

As of the end of November, 9,157 businesses in the four prefectures had received a total of ¥448.9 billion under the subsidy program.

Fishery and seafood-processing companies hit particularly hard by the tsunami face difficulties in business reconstruction.

Under the harsh circumstances, some companies are seeking to expand sales by exporting their products.

Hironoya, a seafood wholesaler in the Iwate town of Hirono, participated in an exhibition event in Taiwan, while Suenaga Kaisan Co., a seafood-processing company in Ishinomaki, took part in a similar event in Hong Kong.

Both companies subsequently started exports of their products.

“The biggest challenge is to expand sales channels further,” said Shuichi Kumagai, a senior official of the Kesennuma Chamber of Commerce and Industry.

Eighteen seafood-processing companies in the Shishiori district in Kesennuma have formed a cooperative association, jointly developing and selling their goods.

Meanwhile, the construction of commercial facilities to boost personal consumption in disaster-hit areas is set to get into full swing.

“Sales at disaster-hit companies may grow if new shopping areas and commercial facilities are built, and more of these companies move from their current temporary outlets to the new facilities to fully resume their operations,” said an official at Iwate Prefectural Government’s industrial revival division.

Still, Satoru Masuda, chief of the disaster reconstruction research center at Tohoku University in Sendai, said, “Because demand in disaster areas is declining due to the falling population, it appears very difficult for sales at companies in the affected regions to rise back to pre-disaster levels.”