Japan firms see no immediate fix for virus pain, some eye better productivity: Reuters poll

Nearly half of Japan’s companies have no immediate plans in place to help counter the impact of the coronavirus pandemic, although a third of those surveyed in a Reuters poll indicated they were looking to improve productivity to cushion the blow.

FILE PHOTO : High-rise buildings are seen at the Shinjuku business district during sunset in Tokyo, Japan, May 31, 2018.

TOKYO: Nearly half of Japan’s companies have no immediate plans in place to help counter the impact of the coronavirus pandemic, although a third of those surveyed in a Reuters poll indicated they were looking to improve productivity to cushion the blow.

The survey suggests a long path to recovery for Japan. The world’s third-largest economy is expected to shrink at its fastest pace in decades this fiscal year, with economic activity not seen returning to pre-pandemic levels for another 2-3 years, analysts have said.

In the latest monthly corporate survey, 49per cent said they had no plans in place to cushion the hit to their sales and profits this summer. Among transport equipment makers, Japan’s key industry, the rate was higher at about 66per cent.

However, 51per cent of the participants said they have plans to overcome the pandemic pain. About 60per cent of this group, or 30per cent of total, said improving productivity was their top pick for dealing with the hit to business.

Reviewing business activity and planning new business were the second and third popular choices, though no transport equipment makers picked these.

In written comments, many firms said cutting costs was the best way to respond to declining demand.

“We are taking various steps, but none of them are expected to produce major effects near term,” a chemicals maker manager wrote in the June 30-July 10 survey, conducted on condition of anonymity so respondents can express their opinions freely.

Three fourth of the firms said their number of workers was unchanged from a year earlier, while two thirds of transport equipment makers said their staffing level was steady.

AUTOS PAIN

The survey underscored the pain inflicted on the automobile sector, which significantly impacts many other industries.

Some 44per cent of transportation equipment makers have furloughed up to half their employees, versus 14per cent of overall firms.

Global car demand has plunged since March as virus-related lockdowns kept people indoors and prompted factories to close.

While many countries have been reopening their economies, analysts say it could take up to five years for demand to recover to 2019 levels.

One in five transport equipment makers expressed concern about capital shortage in the survey, double the ratio of overall firms who voiced such concerns.

Sales in May by Japan’s biggest automaker Toyota fell 34per cent from a year ago, while Nissan sales fell 37.3per cent and Honda sales slipped 29per cent.

Asked about business continuation plans, about 30per cent said they intend to either expand core business or find new ground, while 55per cent aim to restore business to pre-pandemic levels.

For transport equipment firms, restoring business to pre-pandemic levels was the top choice, followed by reducing or reviewing their core business.

DEFLATION

The Bank of Japan kept monetary policy steady on Wednesday but warned uncertainty over the outlook was “extremely high” due to risks such as a second wave of infections.

Two in five firms in the survey said they were concerned about a return of deflation later this year, while 54per cent saw prices remaining flat. Just 6per cent expected prices to rise.

On prices of their products and services, three quarters said they would keep them flat in the second half. Some 17per cent said they would cut, while 8per cent intend to lift prices.

“We remain under strong pressure from clients to cut prices, but demand is so weak to begin with that price cuts won’t help boost sales,” an industrial rubber maker manager wrote.

A retail manager wrote: “As long as consumers’ incomes are on the decline, they will turn to cheap goods and services.”

The survey, conducted for Reuters by Nikkei Research, canvassed 496 big and midsize non-financial firms, with some 230 of them answering questions on the impact of the virus.

Z24 News

Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

Key EU data transfer tools in focus in Facebook, Schrems clash

Wed Jul 15 , 2020
The latest clash between Facebook and Austrian privacy activist Max Schrems could disrupt hundreds of thousands of companies as Europe’s top court rules on Thursday on the legality of tools companies use to transfer Europeans’ data around the world. LUXEMBOURG: The latest clash between Facebook and Austrian privacy activist Max […]

Share

Social menu is not set. You need to create menu and assign it to Social Menu on Menu Settings.