Sunday, January 11, 2009

Toyota Shock....The 2009 Problem

Two terms recently bandied about in the local media are "Toyota shock" and "the 2009 problem".
"Toyota shock" refers to the sudden slump and reversal in profits of Toyota Motor Corp.There are predictions of a huge fall in operating profits.The group earnings forecast anticipate an operating loss of 150 billion yen in the fiscal year through March 2010.Apparently it will be the first time Toyota has reported an unconsolidated operating loss on a full year basis since fiscal 1949.

The principal reasons given are the slump in global car sales and the yens strength against the U.S dollar.
Toyota sells a third of its vehicles in the North America market which has fallen away due to the U.S financial crisis.Toyota's U.S sales nosed dived 33.9% in November while its overall global sales dropped 23.8%.

Other car makers such as Nissan,Honda and Mazda also posted falls in sales for November.The picture isnt any brighter locally as the domestic car sales market fell in November to a 39 year low.
The Impact
Apart from the obvious layoffs and cutbacks there are less apparent downstream results.
Aichi Prefecture's corporate tax revenue will be down some 20% or some 20 billion yen due to the Toyota shock.Things like new public buildings,road and river maintenance and building earthquake resistance programmes may need to be revised or reviewed or put on hold.
Advertising,expense and travel accounts get cut.Workers are laid off so rental housing becomes vacant.Restaurants,taxi drivers and real estate firms feel the impact of belt tightening and less demand for their services.

The 2009 Problem
Part time workers,contract workers,outsourced hires,dispatch workers,seasonal fixed term employees,non regular workers.There seem a myriad of names.
In 2004 government deregulation allowed the entry of dispatch workers into the manufacturing industry.Back then the contract period was limited to no more than one year.
However the contract period was extended to a maximum of three years in March 2007.Companies that took up the three year extended contracts started hiring in 2006.
Now three years later in 2009 these contracts will expire some time this year.
If the companies continue to employ these workers beyond the initial three year contract they have to convert them into regular workers or other types of outsourced hires.
Given the worsening economic climate and the "very severe" employment conditions there is a fear that a large number of these workers will lose their jobs hence the term "the 2009 problem".
To make matters worse if these non regular workers do lose their jobs they could also find themselves homeless as they are told to vacate their company owned residences by their former employers.
According to a Health,Labor and Welfare Ministry report an estimated 85,000 non regular workers will lose or will have lost their jobs by March this year.
(Sources...Daily Yomiuri,The Japan Times newspapers,Kyodo News ).

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