JIN-508 -- The Big Sleep

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J@pan Inc Newsletter
The 'JIN' J@pan Inc Newsletter
A weekly opinion piece on social, economic and political trends in Japan.
Issue No. 508 FridayMay 01, 2009, Tokyo

It’s like something out of a Raymond Chandler novel… except it’s
autoparts manufacturers being investigated not paralyzed millionaires
and their psychotic daughters. Well, actually it’s nothing like a
Raymond Chandler novel – but there are P.I.s involved. Toyota, in its
bid to avoid going the same way as Chrysler, has been employing
private detectives to dig into the affairs of Toyota city’s thousands
of parts suppliers. According to a report by Bloomberg the automotive
giant has been paying the P.I.s to try to work out which of its parts
makers are going to fail and when. Toyota is looking to plug any
potential holes in its supply chains and this means that it will be
looking elsewhere if or, almost certainly, when, the suppliers go
down.

The Bloomberg story is worth reading. You can check it out here. The
article looks at Hironori Minezawa, a private detective that is sent
out to investigate companies whenever rumors start circulating about a
possible bankruptcy. The story quotes Tokyo-based supply chain analyst
Takeshi Miyao from CSM Worldwide, who says that a change in balance
could occur. Presently Toyota controls the procurement system,
squeezing parts suppliers profit margins. At the moment some
subcontractors’ margins are as little as 1 percent or less, according
to the report.

It'll be interesting to see if the surviving parts makers both here
and elsewhere are able to claw back some control from a weekended
Toyota. Of course, Toyota has to survive. This would have been
unthinkable a year ago, but as their counterparts in the US are
showing us, anything is possible.

Bankruptcies in the Japanese auto sector were up 52 percent in March
compared to last year – 41 companies folded. In Aichi prefecture, home
to Toyota city where 80 percent of employment comes from the auto
industry, the number newly registered unemployed was up 88 percent in
February. The Japanese automakers’ market share in North America has
increased but it is little consolation considering that Crysler just
declared bankruptcy, GM and Ford have needed to be bailed out and,
well, also considering that no-one is buying cars in the US…

But while our intrepid gumshoe Minezawa may have plenty of jobs over
the next year or two, at least there is some hope on the horizon.
Potentially anyway. On Thursday it was announced that overall
industrial output rose in March for the first time in six months.
Production rose by 1.6 percent from February. We have to be careful to
read too much into this but it is positive, nonetheless. The Bank of
Japan has still downgraded its forecast for the economy, stating that
GDP will shrink by 3.1 percent in the year to March 2010. Earlier, it
had forecast 2 percent. The IMF however, was more pessimistic,
forecasting the GDP to shrink by 6.2 percent.

The figures and forecasts are by no means fantastic but they do seem
to indicate that there has been some improvement. The BBC suggests
that the manufacturers’ survival strategies - cutting production,
reducing shifts and laying off staff - may be working. Sentiment is
still bad as the recent Tankan survey showed but at least
manufacturers said that they expect industrial production to continue
to rise, by 4.3 percent during April and by 6.1 percent in May.

Michael Condon

Editor-in-chief

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Entrepreneur Association of Tokyo - Seminar-Tuesday, May 12th

Speaker: Rob Van Nylen, Group CEO of JCS bvba

Rob Van Nylen's past endeavors have included working with
Euro-Japan Consulting Ltd. to help establish and grow the
Manneken, Belgian waffle shop chain to over 100 locations.

Rob is currently working as Group CEO of JCS bvba which is
marketing high-end decorative mirror products through Arte
Japan Ltd. and introducing a soon to be smash hit, Poken
through his distribution company Akoni KK.

Please sign up early while seats are available.

Date/Time: Tuesday, May 12th-Doors open at 6:30
(Seminar starts at 7:00)
Location: The Foreign Correspondents' Club of Japan
Language: English
Website: http://www.ea-tokyo.com

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------------------- ICA Event - May 21 --------------------

Speaker: Tom Garry, Director of Sales Engineering,
Verizon Business

Title: Creating IT flexibility to contain costs, increase
productivity and manage IT architectures

Details: Complete event details at http://www.icajapan.jp/
(RSVP Required)
Date: Thursday, May 21, 2009
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members)
Open to all-venue is The Foreign Correspondents' Club of Japan

http://www.fccj.or.jp/aboutus/map
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