Japan Ponders Its New Normal

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

Soldiers pull a boat across floodwater as they help to evacuate residents of Tagajo city, Miyagi
JIJI PRESS | AFP | Getty Images
Soldiers pull a boat across floodwater as they help to evacuate residents of Tagajo city, Miyagi

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

And with electricity still scarce from the Fukushima Daiichi nuclear 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 economy 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.

But 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, and the stricken Fukushima Daiichi 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, here 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, said Hidetaka Maruyama, a company spokesman.

A new factory in Wuhan, China, completed in April, 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,” Mr. Maruyama said.

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

“What are the new industries that will support Japan’s future? That’s the question Japan must ask as it rebuilds,” said Ryutaro Kono, economist for Japan at BNP Paribas.

The government has promised to soften the economic blow with a 4 trillion yen ($49.7 billion) emergency budget. Japan will soon see its biggest jump in public works spending in years as it clears farmland, fixes roads and rebuilds schools and offices.

But Japan must avoid the pitfalls of its troubled 1990s, when ill-conceived public works left the nation dotted with little-used dams and bridges, said Masayoshi Honma, a professor in economics at Tokyo University.

Local industries are also ripe for reconsideration, Mr. Honma said. A plan floated by the government, for example, would consolidate more than 200 tiny fishing ports in northeast Japan into 11 hubs.

In Higashi-Matsushima, a coastal town in Miyagi Prefecture that was hit hard by the tsunami, fishermen are doing more than just rebuilding. They are trying to cope with their region’s inexorable demographic slide to a place with fewer, and older, people.

Of the 27 oyster farmers left in the town’s Tomei district, three were killed in the tsunami, swept out to sea with their boats. Many others lost their homes, and the oyster beds they had cultivated for decades to make Miyagi oysters a coveted delicacy.

The remaining farmers plan to band together. They will start over with a batch of 1,000 young seed oysters that “miraculously” survived the tsunami, said Gensuke Takahashi, age 64, who has been fishing these waters since he was 19.

“We can’t cope on our own anymore — not now,” he said, mending ropes beside a boat he now shares with other oyster farmers. An early-morning sail this day was cut short by debris still floating in the bay: tires, a tiled roof. “We are starting again, but there will be fewer boats, fewer oysters,” he said, “and fewer of us.”

Even in Tokyo, there has been a humbling realization that the conveniences people took for granted depend on an industrial system teetering on geologic fault lines, and an energy supply vulnerable to breakdown.

At first sight, Tokyo, home to 13 million people, is largely back to normal after weeks of postquake uncertainty.

The streets are filled with shoppers, radiation is down to background levels and the blackouts that threw the city into disarray have, for now, been called off.

But electricity is still an iffy resource. Many of the city’s neon lights remain dark, and escalators turned off.

There has been a spike in bicycle sales among commuters, and in flat shoes among women, after disruptions to the city’s usually clockwork public transport system.

Tokyu Real Estate Investment Management owns one of the city’s most-viewed digital advertisement screens above Shibuya’s “scramble crossing,” where traffic stops periodically for 30 seconds and up to 3,000 people walk in every direction.

For a month after the quake, the company switched off the screen and its bright lights, throwing the normally glittering city center into an eerie darkness.

The screen is now lighted for parts of each day. But the company is prepared to switch it back off, if necessary.

“It’s impossible to read what will happen going forward,” said Akihiro Someya, a Tokyu spokesman. “It’s hard to know whether we will ever go back to normal.”