The struggle of marine product processing

March 6, 2013

Marine product processers still struggling to recover after March 11 disaster

http://mainichi.jp/english/english/newsselect/news/20130306p2a00m0na020000c.html

The marine product processing industry is struggling to make a comeback in coastal areas hit by the devastating March 2011 earthquake and tsunami in spite of government subsidies, with some business starting to go bankrupt.

In a bid to help restore facilities and equipment in the disaster-hit areas, the government has provided "group subsidies" to groups of small- and medium-sized businesses that compile joint business plans and are judged as important in terms of providing employment and supporting the economy. However, a survey by the Tohoku Bureau of Economy, Trade and Industry has found that roughly 30 percent of marine product processers are still registering sales under 30 percent of what they were making before the March 2011 disaster.

As a result, businesses have started going bankrupt and closing their doors. It is feared that they could come under further pressure with the expiry of the financing facilitation law, which allows for deferral of loan repayments.

Prefectural government figures show that 4,506 companies in Aomori, Iwate, Miyagi and Fukushima prefectures were deemed eligible to receive group subsidies for small- and medium-sized companies. At the end of January, the Tohoku Bureau of Economy, Trade and Industry compiled the results of a questionnaire distributed last year to these companies. A total of 67.5 percent of the 3,764 businesses that responded said that their sales were still below the levels seen before the earthquake disaster. The figure rose to 89.5 percent when restricted to companies in the fisheries and food processing industries. Overall, 17 percent of the companies said that their sales had not risen past 30 percent of what they were making before the disaster. Restricted to the fisheries and food processing industries, this figure jumped to 30.8 percent.

"The survey was carried out in autumn last year, but the situation has hardly changed," a representative of the Tohoku bureau said. An official from the Ishinomaki Chamber of Commerce and Industry cautioned, "If the situation continues, more companies will collapse without sufficient funds to repay loans, which could trigger a chain of bankruptcies."

One of the reasons companies have struggled to make a comeback is a lack of workers. The questionnaire showed that the overall number of workers had dropped 8.4 percent compared to before the March 2011 disaster. However when confined to the fisheries and food processing industries, this figure rose to 29.3 percent.

Statistics from the Hello Work government employment agency in Ishinomaki, Miyagi Prefecture, showed that the number of jobs available in the food product manufacturing industry stood at 2.89 times the number of applicants as of January this year -- much higher than the national average of 0.89 across all industries. It is believed that positions have been left vacant as a result of a greater proportion of women moving inland, and people shying away from work in coastal areas that were hit by the tsunami.

Companies in the disaster areas have seen construction expenses swell as work is delayed amidst a lack of materials. At the same time, the Tohoku bureau maintains that roughly one-third of companies in the fisheries and food processing industries have no prospects of procuring the funds they need to operate their businesses after they are rebuilt.

The Small and Medium Enterprise Agency and Miyagi Prefectural Government have established a system to provide low-interest loans to such companies, but in some cases companies seeking loans have been turned down on the basis that they have no ability to repay them, according to one Miyagi Prefectural Government representative.