Japan Press Weekly

Tweet

2013 January 16 - 22 TOP3 [ECONOMY]

Valuing skilled workers will save Japanese companies: economist

The necessity for Japanese corporations to compete globally is to value workers who develop promising patents, technologies, and skills, said Fujita Minoru, an economics professor at J.F. Oberlin University.

Akahata on January 16 and 17 carried the gist of an article he contributed as follows:

Many Japanese corporations are to adopt the so-called “selection and concentration” restructuring scheme this year as well, trimming unprofitable divisions to strengthen their profitable ones.

Hitachi and NEC set up Elpida Memory in 1999 by integrating their unprofitable DRAM businesses. Hitachi and Mitsubishi Electric merged their LSI segments into Renesas Technology in 2003.

What happened to these spinoffs later? Both faced bankruptcy: Elpida was bought out by a U.S. chip maker and Renesas was, in effect, nationalized for business reconstruction.

Business mergers or tie-ups often turn out to be ineffective because blending different corporate cultures creates various difficulties and a lack in communication.

After selling off or integrating weaker areas, management conducts restructuring programs to turn around business performance. Here is the risk of causing another restructuring scheme to be implemented.

Restructuring schemes associated with cuts in “redundant” personnel attach top priority to achieving profit targets, forcing the remaining workers to engage in even more intensive work than before. Cost-cutting measures take place at the same time to reap more profits, coercing subcontracting makers to accept cuts in unit prices.

With these measures, corporations can temporarily improve their earnings while neglecting R&D and product modification. After completing such a cost-cutting circuit, a profit slump occurs again. Then, another restructuring move arises. They can never establish their primary sources of revenue.

The key to future product development in Japanese corporations will be low-power, energy-saving, nano-scale processing technologies, and robotics. Development of these areas requires a high degree of skill and technology. Chasing after short-term benefits rather than maintaining the abilities and technical skills of workers which Japanese corporations have fostered for long, they can no longer respond to emerging needs. As a result, they will miss out on opportunities and have to face tough competitors.

Business integration or the so-called “selection and concentration” ploy cannot enable Japanese corporations to successfully compete in the global market. Since they have a lot of capable workers equipped with certain skills, they should make the best use of these workers and use their ability in product development.