[Viewpoint] Japan could offer golden opportunityA couple of weeks ago, I was in Japan on a story. The country was deep in the doldrums due to a strong yen, staggering government debt and power shortage. Even its once-proud trade balance was in the red. However, one enterprise stands among the collective corporate and economic inertia: Toray Industries, a world-leading producer of industrial products ranging from textile fiber to high-tech chemical materials.
Toray’s unique corporate culture and legacy gets much respect from Korea’s top entrepreneurs. Samsung Group founder Lee Byung-chull and current chairman Lee Kun-hee visited the company during their trips to Japan.
The company’s headquarters occupy the 21st to 34th floors at Nihonbashi Mitsui Tower in Chuo, Tokyo. Instead of spending money on real estate, the 86-year-old company “instead invests in people and the future,” said Norihiko Saito, the company’s senior managing director. As a result of this philosophy, the company plans to continue occupying a rented office building.
Another particular aspect of Toray’s management style is that it does not fire employees. It upheld the labor tradition amidst the catastrophic post-World War II economy and the global oil shock. It developed new areas of business to maintain its workforce status quo.
Toray runs an umbrella of family affiliates. The group has 226 affiliates that employ 38,700 workers. When a foreign consultant company advised downsizing money-losing units, Toray refused, saying it could not restructure its workforce. Instead, it went on recycling reserve forces. For instance, if the acrylic fiber business line fares poorly, it transfers its staff to a newer synthetic film line.
The fastidious company is currently building its new carbon fiber manufacturing plant in Gumi, North Gyeongsang, at a cost of 480 billion won ($427 million). Carbon fiber is an expensive, strong compound that is in demand for consumer goods such as golf clubs and tent poles, as well as for the aerospace and automotive fields. It is the country’s mainstay product that has never been manufactured overseas.
Toray plans to make the Gumi plant its base for its global supplies of carbon fiber. The plant, which will be running from January 2013 with annual production capacity of 2,200 tons, is expected to provide 30,000 jobs and generate 10 trillion won in revenue. Saito said carbon fiber is a strategic compound that goes into missiles and jet fighters, and his company chose Korea over socialist China because Korea is a “white” country.
But the real reason is electricity. Chang Jae-young, who specializes in carbon fiber at Hyosung, said an enormous amount of power is needed to produce the ultra strong and light carbon fiber. The electricity fees Korea charges manufacturers are one-third of Japan’s, similar to China’s. Toray decided to invest in Gumi after the Tohoku earthquake and subsequent tsunami devastated Japan’s nuclear power plants last March.
Electricity cuts were applied to manufacturers as well as households due to the disruption at the nuclear facilities. Utility fees also shot up because of the higher cost of running power on liquefied natural gas. Imports of LNG to run power grids have even led Japan to run a trade deficit.
The main Korean opposition, the Democratic United Party, which has pledged to scrap the Korea-U.S. free trade agreement, plans to campaign against nuclear reactor construction. As with the trade pact, the opposition’s position on nuclear reactor policy is incomprehensible.
The nuclear power plants currently under construction or those set to be built are part of a plan decided by the Roh Moo-hyun administration in 2006. When state and private companies won a landmark deal to build and export reactors in the United Arab Emirates last year, the DUP, which served as the ruling party under Roh, touted it as a Roh government accomplishment, saying President Lee Myung-bak did no more than attend the signing ceremony.
But it reversed its words after the nuclear disaster in Japan and is now joining the progressive opposition camp to oppose more nuclear facilities.
The next five years can be our golden opportunity. Toray is not the only Japanese company eyeing the southern coastal region for new manufacturing bases safe from earthquakes and secure in power supplies. Over 100 companies have consulted the Korea Trade Promotion Agency. Korea’s southern coast has modern port and road infrastructure as well as a stable power supply network.
The opposition, which does not hide its conviction that it will become the next ruling power, should be prudent with policy choices. It must consider the business prospects of the nuclear reactor plant that could bring in Japan’s newest technology and a boom in local business. Before counting votes, the party should first study the economics.
by Lee Chul-ho
* The author is an editorial writer of the JoongAng Ilbo.