As blast furnaces shut down, Japan steels itself for change. Top 5 companies to lose 25 percent of work force in cost-saving cuts
Kamaishi, Japan — ``Steel is Japan.'' And Kamaishi, where the nation's first Western-style blast furnace was built more than 100 years ago, is where it all started. Today, like some of America's single-industry towns, Kamaishi is struggling to start out afresh. Nippon Steel is closing down its blast furnace. It promises to keep its mills rolling, but citizens are girding for the day when no steel will be fabricated here at all.
``Steel is Japan'' was the industry's boast during the 1960s and '70s, when Japan caught up with and then outstripped the United States to become the world's largest steel producer. And Nippon Steel became the biggest steel company in the world.
No longer. Buffeted by the high yen and by competition from cheaper producers such as South Korea, Venezuela, and Brazil, Japan's steel industry is in deep trouble.
This month Nippon Steel and Nippon Kokan, Japan's No. 1 and No. 2 producers, announced or will announce plans to drastically cut production and personnel.
Nippon Steel said Feb. 13 that it was closing down five blast furnaces and reducing personnel by 19,000 in the next two years. Nippon Kokan is expected to announce a 7,000-man cut before the end of the month.
Altogether, Japan's five top steelmakers will lose 25 percent of their work force.
Before steel, Kamaishi was a quiet fishing port on Japan's Pacific coast, 300 miles north of Tokyo. Fishing is still a big industry, but steel accounts for the livelihood of at least one-third the city's 60,000 in habitants. When steel was king, the huge mill dominated Kamaishi's landscape, with two blast furnaces glowing red day and night, and the city's population soared to 90,000. Today, Nippon Steel still dominates the townscape. But the local rugby team has lost the Japan Cup and there is little bounce in the steps of workers trudging to their morning shift.
``I don't want to leave Kamaishi,'' said one, ``but I may have to.''
At city hall, municipal officials tried to put the best face on things. ``Compared to some of the other Nippon Steel towns, we did a bit better,'' said Morio Wada of the mayor's office. ``The blast furnace will be closed down next year, but 800 out of 2,300 jobs will remain.''
Including workers hired by subcontractors, Mr. Wada thought that perhaps 3,000 jobs would be lost. Kamaishi's blast furnace was built because it had Japan's only good iron mine, which is still working. But today iron from Australia is far cheaper than domestic ore, which in any case is almost nonexistent. And Kamaishi - 2 hours from trunk rail and road links, on the ocean side of a picturesque mountain pass rendered impassable by every winter snowstorm - is scarcely where any steelmaker would choose to establish an integrated steel mill today.
``We're angry at Nippon Steel,'' said Mayor Saijiro Hamakawa in a recent interview. ``We grew over the years with Nippon Steel, supporting them and being supported by them.''
The company, which is expected to suffer a loss of $650 million in the current fiscal year, says it will dismiss no worker outright.
Its work force is aging, and it will rely on attrition to slim down by 9,000. Another 6,000 will be absorbed by new industries the firm intends to develop, such as electronics, communications, or biotechnology. The remaining 4,000 will be found ``other jobs'' by the company.
Today 80 percent of Nippon Steel's income comes from steel. By 1995, it hopes to reduce that to less than 50 percent, and to be fully competitive with South Korean steel. It is working on the assumption that the dollar will be worth 150 yen, more or less as it is today, and that annual Japanese steel production will be 90 million tons (compared to nearly 100 million tons today). Nippon Steel's share will be 25,000,000 tons, instead of 34,000,000 as it is today.
The other major steelmakers have similar plans.
``Without rationalization today, there will be no Nippon Steel tomorrow,'' says vice-president Akira Miki, who grew up in Kamaishi when his father was stationed there. ``Wait three years, and you will see us rising again full of strength,'' says president Yutaka Takeda.
But Kamaishi is preparing for the worst.
``We used to be 100 percent dependent on Nippon Steel,'' says Hideki Nakamura of Kamaishi Kasei, whose president, Kippei Tanaka, is also president of Kamaishi's Chamber of Commerce. ``Today, except for a few workers who still do odd jobs inside the steel mill, we are 100 percent independent.''
Kamaishi Kasei has about 300 workers, Mr. Nakamura said. It used to have about 500, all working inside the steel mill for wages considerably less than those of regular employees. In this sense, it was a typical subcontractor. But Mr. Tanaka saw the handwriting on the wall years ago, and diversified, first into fertilizer produced from blast-furnace waste, then into fiberglass boats and other plastic products having nothing to do with the mill.
``The next five or six years are going to be very tough,'' says Mayor Hamakawa. ``Somehow or other, though, we're going to make it.''