This was an article from the NY times over the weekend!
SHIBATA-MACHI, Japan — When the ground shook violently on the afternoon of March 11, the ceiling collapsed in part of the huge Ricoh copier factory here, exposing the vents and wires above.
The offices at the Ricoh plant near Sendai are still in disrepair; workers have focused on restoring the factory and production.
The ceiling is still not fixed. But employees are back at their posts, working under temporary lighting and wearing hard hats to protect themselves in case debris falls.
The factory may be a case study for the can-do recovery of Japan’s manufacturing industry. Only seven weeks after the huge earthquake in northeastern Japan collapsed the ceiling, toppled a huge water tank and upended assembly line equipment, the Ricoh factory here is nearly back to full production. And so, for the most part, is all of Ricoh, a nearly $25 billion company that makes copiers and other office equipment.
“The influence of this disaster is not as large as the world thinks,” Shiro Kondo, Ricoh’s president, said in an interview at the company headquarters in Tokyo.
At varying speeds, Ricoh’s story is being played out all over the quake-affected parts of Japan. The pattern suggests that whatever the long-term effect of the natural and nuclear disasters on this country, manufacturing — the most important cog in Japan’s export-oriented economy — might largely rebound within a few months.
Without doubt, things are not back to normal yet. And some sectors, particularly automobile manufacturing, are suffering more than others. Still, almost every day companies are reporting progress on some of the hundreds of factories knocked out of commission by the quake or ensuing tsunami. The government estimates that 7 percent of Japanese factories were in the region heavily affected by the earthquake.
A survey of 70 damaged factories released last week by Japan’s Ministry of Economy, Trade and Industry found that nearly two-thirds of them had recovered while most of the rest in the survey group expected to do so by summer.
Shin-Etsu Chemical, a leading producer of silicon wafers used to make computer chips, said last week that it expected to return to pre-earthquake production levels by July. Sony has resumed operations at nine of its 10 halted factories, with the 10th expected to come online in phases from May to July.
Masatomo Onishi of Kansai University, who studied the recovery after the 1995 Kobe earthquake, said that when a disaster strikes, Japanese companies tend to cooperate with one another and workers rally to the cause.
That seems to be the case at the Ricoh factory here. Even many of the Ricoh workers who lost family members to the tsunami came to work. Some whose homes were destroyed or flooded slept on blankets on the floor of a factory conference room. With gasoline scarce, many rode bicycles. And with bathrooms not working because of blocked sewer lines, employees improvised with plastic bags.
Still, the disaster exposed vulnerabilities that simply restoring any one factory’s assembly line cannot fully resolve.
The biggest susceptibility for Ricoh and many other companies has proven to be parts shortages. Although Japanese manufacturers have spread their factories around the world — Ricoh makes 70 percent of its products outside of Japan — many of those overseas plants often still depend on parts made in Japan.
For example, Tohoku Ricoh, as this plant is known, is the company’s only factory making a particular motor used in copiers. When the factory here went down, a giant Ricoh plant in Shenzhen, China — which supplies most of the Ricoh copiers sold in the United States — had to stop production for a full week. (Mr. Kondo said he did not think Ricoh’s sales in the United States would be affected much.)
Ricoh is also dependent on parts from various suppliers in Japan, some of which suffered their own damage from the earthquake.
That is forcing Ricoh to live off its inventory of certain computer chips and connectors. If production of those parts does not resume in the next couple of months, Ricoh might have to slow or halt production.
Another weakness was in emergency planning.
Tohoku Ricoh, for instance, had 200 metric tons of backup water for cooling and ink production, in case water service was disrupted. But when the power also went out, it could not pump the water to where it was needed. Workers had to deliver the water, one ton at a time, by truck.
The emergency plan at Ricoh’s headquarters was designed to cope with a big earthquake in Tokyo, not one in northeastern Japan.
“We had a manual of what to do in such cases, but things did not go as written,” said Toshihiro Kenmoku, a leader of the recovery task force at headquarters.
When the earthquake occurred, powder started coming out of the walls and ceilings of the office of Hiroshi Tsuruga, the president of Tohoku Ricoh. “I felt like I would be crushed with the building and die,” Mr. Tsuruga recalled.
Neither Mr. Tsuruga nor any of the other 1,270 Tohoku Ricoh employees were killed at the factory, which is about a 20-minute drive from the coast. But one employee, sleeping at home to prepare for the night shift, was swept away by the tsunami. A Ricoh sales and service employee was also killed by the wave while calling on a customer near the coast. Some 26 family members of factory workers perished or are missing, 42 homes were partly or completely destroyed and another 37 flooded.
The day after the quake, 70 factory employees gathered in the gym to plan the recovery, posting the plans on the walls. A similar scene was taking place at headquarters in Tokyo, where a conference room was converted into a war room for a recovery task force. The table soon became covered by phones, documents and packages of instant noodles.
One of the first tasks was to send 10,000 bottles of water, as well as food, blankets and other supplies, to Ricoh’s stricken factories using the company’s own trucks.
Besides Tohoku Ricoh, three other Ricoh factories making a variety of products and one research center were damaged. But Tohoku Ricoh — which accounts for about $60 million in annual revenue, or one-fortieth of Ricoh’s total — posed the biggest challenge.
The priority was to restore production of ink and the motors made only at the Tohoku plant.
Finally, by April 6, all the production lines were back in operation, with the exception of toner manufacturing. (Toner is used for machines that can print, copy and scan, while ink is used for some copiers.)
Then, On April 7, an aftershock of magnitude 7.1 jolted the region. Electricity and water were knocked out again and many repairs undone.
“Production went back to zero again,” said Hiroyuki Murakami, a general manager. It took until April 15 to restore motor production.
Mr. Kondo, Ricoh’s president, said it would probably take half a year for the company to be fully back to normal. He declined to say how much the lost production and the lower economic activity expected in Japan this year would hurt the company’s sales and profits.
“We have many problems, so it’s very difficult to think about the results of this year,” he said.
His main concern was that a drop in industrial and consumer spending would mean less photocopying. Japan accounts for about 45 percent of Ricoh’s sales.
On April 12, Masahiro Nakanomyo, an analyst at Barclays Capital, cut his estimate of operating profit for the fiscal year ending next March to 85 billion yen, or $1.05 billion, from 93 billion yen, or $1.14 billion.
Last week Ricoh reported sales for the year that ended March 31 of 1.94 trillion yen, or $23.9 billion. That was about 3.9 percent below the forecast the company made on Feb. 2.
Operating profits were 60.2 billion yen, or $740 million, 29 2 percent below the forecast. The company attributed part of the shortfall to the earthquake.
Ricoh predicted that operating profits for the year that ends next March would be 70.0 billion yen, or about $860 million. Based on that revised forecast, Mr. Nakanomyo at Barclays further reduced his estimate of operating profit for the year, to 63 billion yen.
At Ricoh headquarters, the war room has reverted to a conference room. But a new challenge looms. Because of the power plants disabled by the earthquake and tsunami, big companies like Ricoh will have to cut their use of electricity by up to 25 percent in the summer, which could also disrupt production.
Another task force has gone into action.