Japanese companies shutdown update

Image via Wikipedia

Japanese companies are not only reeling from damage to factories and suppliers in quake-hit northeastern Japan but are also suffering from fuel shortages nationwide and power outages in the Tokyo area that are affecting production, distribution and the ability of staff to get to work.










AUTO MAKERS

* Toyota Motor Corp halted most operations at 18 factories that assemble Toyota and Lexus vehicles in Japan. It has restarted production of three hybrid models, the Prius, Lexus HS250h and CT200h, from March 28 at two factories but will suspend output for one day this week, on March 30. Toyota is making car parts at plants near its base in Toyota City, central Japan, for overseas assembly facilities and for repair parts. Toyota will delay the launch of the Prius wagon and minivan models in Japan from the original plan for the end of April.
* Honda Motor Co extended its production halt in Japan to April 3. On Monday, Honda said a fifth of its Japan-based Tier 1 suppliers affected by the earthquake would take more than a week to recover. Honda made 69,170 cars in January in Japan, accounting for around a quarter of its production. On Thursday the company said it would resume production of motorcycles and power products at its Kumamoto plant in Kyushu, southern Japan.
* Nissan Motor Co resumed vehicle production at all assembly plants in Japan from Thursday, March 24, while supplies last. It resumed production of parts for overseas manufacturing and repair parts on March 21. Restoration continues at its damaged Iwaki engine factory in Tochigi prefecture, north of Tokyo. Nissan made 81,851 cars in January in Japan, where it manufactures 23 percent of its vehicles. Goldman Sachs has calculated that one day's lost production costs Nissan about 2 billion yen ($25 million) in profit.
* Mazda Motor Corp said on Thursday it would suspend production of vehicle repair parts and parts for overseas production at its Hofu factory in Yamaguchi on March 28, after having resumed limited operations there earlier this week. Its Hiroshima factory will continue limited production until further notice, a spokeswoman said.
* Suzuki Motor Corp will keep car production halted at its three assembly plants in Japan through March 29, and resume assembly of commercial trucks and vans at one of those plants for one shift on March 28 and 29. It will continue operating an engine factory using parts in its inventory. It has not decided on production plans for March 30 and beyond.
* Fuji Heavy Industries Co said all five of the car and parts-related plants for its Subaru-brand vehicles in Gunma prefecture, north of Tokyo, will be shut at least until Monday, pushing back a restart that had been due on Tuesday. Production of vehicle parts to be shipped to overseas manufacturing plants started on Wednesday and production of vehicle repair parts began Thursday.

ELECTRONICS MAKERS:

* Sony Corp  said shortages of parts and raw materials would force it to suspend or reduce production at five plants in central and southern Japan making digital cameras, camera lenses, flat-screen televisions and other goods. Another plant may be affected by rolling power blackouts. Six production sites in northern Japan have been halted since the quake. If shortages continue, Sony may consider temporarily shifting some production overseas.
* Toshiba said output was suspended at a factory in Iwate prefecture making system LSI chips for microprocessors and image sensors, with no time frame yet for a resumption of output. An assembly line at a plant making small liquid crystal displays for smartphones and other devices will be closed for a month to repair damaged machinery.
* Canon said it re-started operations at two plants on Friday, but two camera plants remained closed and the company was not sure which factories it would be able to operate next week, amid a shortage of parts.
* Panasonic said some plants in northeast Japan remained closed including one making optical pick-ups and another assembling cameras and audio equipment.
* Renesas Electronics, the world's No.5 chipmaker, said production at three of its 22 factories in Japan is still halted while output at three other assembly plants has been affected by power outages imposed by utilities unable to meet electricity demand in the wake of the earthquake.

OTHERS

* Shin-Etsu Chemical, the world's leading maker of silicon wafers, said its biggest wafer plant remained offline, along with a PVC factory. The firm has not said when it will restart operations. Some of the wafers made in Japan are shipped to chip companies overseas. Shin-Etsu is trying to boost production elsewhere, particularly of 300-mm wafers, to make up the shortfall.

read more here

Top 100 most respected companies

Here a full list of the most respected companies of the world from Barron's (click on the image to enlarge)

New Labour contract in Italy or How a corporation can rule a nation...

Interesting article from VoxEU.org on the first of many incoming attacks to the labour market in Europe, we are becoming hostages of the corporations, in this story it is not the new contract itself but how it has been forced on the labour market without a real reaction or guidance from both unions and political parties, we have reached a situation where national governments are losing more and more authority every year, on the other side corporations are on the rise and are dictating policies to sovereign states who if not compliants face loss of factories and loss of jobs.
Since we are now being ruled from corporations and not governments it would make sense to pass laws enacting general elections for the board members , at least we could elect the real rulers of the nation instead of their political puppets.

The macroeconomic effects of the new Fiat labour contract

Paolo Manasse 18 January 2011

Workers at a Fiat plant in Turin recently voted to approve a new, innovative labour contract that promises higher wages and new investments in exchange for tighter discipline and oversight. This column says that if such a model of industrial negotiations were adopted across Italy, employment would rise in both the short and medium term.

On 15 January, workers at the historic “Mirafiori” plant in Turin voted to approve a new labour contract that had been signed by Fiat and by various trade unions but rejected by the powerful, leftist union of metal workers. The vote was close and workers did not fully follow their leadership; 54% voted for the reform – a percentage significantly lower than share workers belonging to the unions that signed the new contract (60-65%).
The new contract provides an exception to the current system of industrial relations which is based on a “national contract”. The key deviations are part of an exchange. On one hand, it allows more flexibility in work shifts, tougher controls on absenteeism, stricter rules for illness-leave, and a reduction in work breaks. On the other hand, the Fiat CEO, Sergio Marchionne, promised new investments (up to €1 billion after 2012), and higher wages (possibly €3,500 a year more). Mr. Marchionne welcomed the result by saying that the vote proved that workers had “confidence in themselves and in their future”.
The debate leading to the vote has been divisive and heated. Those in favour welcome this as an epoch-defining change in industrial relations – the end of the 1970s style class struggle. It settles the stand-off that long involved what many saw as a frontal attack on workers’ rights based on outsourcing “blackmail”.
The debate has mostly focused on issues of workers’ representation. In a functioning system of industrial relations, workers should delegate their elected representatives to negotiate with the firm. In the present case, paradoxically, the new contract establishes that only the trade unions that have signed the contract will be entitled in the future to represent the employees. As a result, one worker out of two will now be left without legitimate representation.
The concerns of Fiat can be understood by what economists call the hold-up problem in negotiations. Before making the investments, the bargaining power of the Fiat is very high, because it can credibly threaten to move production abroad if its demands are not met. After making the investment, that threat lacks credibility as it is already locked-in, so the bargaining power of Fiat is weak. This is why Fiat wanted to predetermine its counterparts in future negotiations.
So far, though, the debate has largely ignored the macroeconomic consequences of the Fiat plan.

Macroeconomic consequences

A key macroeconomic question is: What would happen to employment and real wages if the Fiat plan were to be extended to the whole system of Italian industrial relations?
The answer is that, in the short term – i.e. before the new investments – the real wage is likely to fall, not rise, while employment is likely to increase. In the medium term – i.e. after the investment – the real wage should increase along with employment.
Here's how to think about it. First, we must define what we mean by the new “Fiat contract”. Initially, the company introduces more effective discipline and monitoring that reduces work-breaks and provides tighter controls for leave, sickness, and absences. In a second step, the company carries out productive investments that increase the productivity of labour.
Second, we must be clear about the logical framework used to study the linkages. The most natural conceptual framework here is the Shapiro and Stiglitz (1984) efficiency-wage model (see Appendix for details).
The first effect of the new contract is to make it easier to discover “shirking” workers, for whom the risk of being laid off increases. As a result, in the logic of the model, a lower wage is required to elicit the workers’ effort. But the logic doesn’t stop there.
As the bargaining power of workers falls, so does the real wage. In turn, this makes it more convenient to the firm to recruit new workers. Thus in the short term, employment grows and real wages fall. In the second step, Fiat invests in the plant and this raises the productivity of labour. The demand for labour by the company increases and these results in a higher employment and wages.

Conclusion

This logic suggests that it is reasonable to believe that the new Fiat contract – if it were extended more widely – will lead to a rise in employment in both the short and medium term. However, the deterioration in the bargaining position of workers should lead to a temporary fall in the real wage.

References

Shapiro, C and J Stiglitz (1984), “Equilibrium Unemployment as a Worker Discipline Device”, American Economic Review, 74(3):433-444.

Appendix

The model of Shapiro and Stiglitz is well suited to answer our question. The model, shown in the Figure below, consists of two curves.

The downward sloping curve (Ld) is the labour demand by firms, and relates the number of workers hired (NL, on the x axis) and the real wage (w, on the y axis); the higher the wage, the lower the firm’s demand for labour. The second curve (NSC, No shirking condition) is positively sloped, and describes the real wage which makes the worker indifferent between shirking (and risking to be fired) and eliciting effort on the job. If employment is low (and unemployment high) it will be difficult to find a new job if one is fired, and therefore a relatively low salary will be enough to convince the worker to be exert effort. Conversely, if employment is high, being laid-off is not too costly, since it will be easy to find a new job. Hence a higher salary will be required to convince the worker not to shirk. For these reasons, the NSC curve is positively sloped. In the model, wages and employment are jointly determined when both relations are satisfied, at the intersection of the two curves, point Q.
The first effect of the new contract is to make it easier to detect shirkers, for whom the risk of redundancy rises. Thus a lower wage is sufficient to convince workers to be productive and NSC curve shifts down. As the bargaining position of workers falls, the real wage declines and employment rises (point Q shifts down to the right). When the Fiat's investments occur (they should be unexpected for their effects to materialise only at the time when they are made), the productivity of workers rises and the demand for labour increases; the Ld curve shifts upward. This effect produces an increase in employment as well as in the real wage.

This article may be reproduced with appropriate attribution. See Copyright (below).
full article link: http://www.voxeu.org/index.php?q=node/6025