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Economic Seminar: Creating a New Tohoku


• Tohoku economic seminar, one of Kizuna 5: the fifth anniversary of the great earthquake and tsunami related events, took place on March 9 at the Grant Thornton’s conference room.
• Ichiro Sone, Chief Executive Director of JETRO Chicago, spoke about “Creating A New Tohoku”, the firsthand observations on Tohoku’s recovery and an update on the economy-insights on Tohoku region. Akihiro Ohyama, CEO of IRIS USA, Inc., spoke about “Our Challenge to Revive Tohoku”. IRIS’s parent company headquarters is located in Sendai, Miyagi Prefecture in Tohoku region. The last speaker, Yoshiyuki Takasago, Deputy Director-General, Commerce, Industry and Tourism Department of Miyagi Prefecture Government, talked about “Recovery and Business Opportunities in Miyagi”.

• In his opening remarks, Consul General Toshiyuki Iwado said that the two ways to help supporting Tohoku’s economy were buying food and promoting tourism. He emphasized safety of the food, which was only allowed to enter the market after passing the strict examinations. He also accentuated the attractiveness and the safety of the Tohoku region except some prohibited areas near the crippled Fukushima Daiichi Nuclear Plant.

Creating a New Tohoku

• Ichiro Sone spoke about the update on reconstruction efforts.
• The number of evacuees has decreased from 470,000 to 174,000, much of the infrastructure has recovered, and industrial production indices recovered to the pre-earthquake level. The decontamination effort has continued, and evacuation orders have been lifted area by area. Recovery efforts are well under way, but there are still many things to be done. It takes a long time.

Efforts toward Decommissioning the Fukushima Daiichi Nuclear Power Plant

• The completion of the decommissioning will take 30 to 40 years, but the work is moving well.
• The power plants are under cold shutdown, and fuel removal of unit 4 was completed in 2014.
• The contaminated water has been managed under the three basic principles; 1) removing the contamination source, 2) isolating groundwater from the contamination source, and 3) preventing leakage of contaminated water. Multi-layered measures have been taken such as constructing land-side impermeable walls by utilizing the frozen-soil method.
• The contaminated water, which contained radioactive materials with a relatively low concentration, had been flowing out into the open sea. To respond that, additional measures such as the placement of purification materials have been taken since the end of February, 2015, and a comprehensive risk review was conducted.
• The fuel debris removal from the reactors is scheduled to be completed within 10 years, and then the decommissioning work will continue.
• The world has had a few nuclear power plant accidents including Chernobyl (1986), Three Mile Island (1979), and Windscale in the U.K. (1957). None of them has completed decommissioning, according to a person who represents an US nuclear remote/robotic system which has worked in Fukushima. He said, “The work being done at Fukushima is actually moving at an accelerated pace, and this is a great accomplishment.”

• Sone said, “The people in Fukushima have been suffering with the damage caused by rumors and misinformation.” Radiation levels in most part of Fukushima are now at the same level as the major cities in the European Union and the U.S.
• The food and agriculture products from Fukushima are the safest in Japan because radiation levels are measured and inspected.
• Two key industries for the future are lifescience and renewable energy. Foreign companies have been invited to set up their facilities in Fukushima with several incentives. Now Fukushima has 2.5 times more foreign companies than it had before the disaster.

Our Challenge to Revive Tohoku

• Akihiro Ohyama, a native of Sendai City, spoke about how his parent company, IRIS Ohyama, has helped Tohoku.
• Interestingly, Kentaro Ohyama, CEO of the company, took over a small molding company from his father when he was 19 years old. During the past 50 years, Kentaro expanded it to a global company as one of most innovative household products companies with over 7,000 employees and the group sales of $2.675 billion. The company produces 15,000 items in eight factories in Japan. Moreover, it introduces 1,300 new items every year, which contribute to 56 % of the total sales of the company. IRIS group is consisted of 23 companies in the world.

• When the great earthquake hit Tohoku, the headquarters’ office and a main factory were damaged, but all 500 employees survived. Three days after the disaster, 388 employees came back to the company to resume the operation. Due to their hard work, the company resumed its operation in two weeks. Its recovery was unusually quick.
• Many employees had damages at home, but the company asked them to keep working because producing products could contribute to the needs of the society.

• Daishin Store, one of the group companies, had a long line of customers a day after the disaster. They wanted to buy whatever was needed to keep their lives; especially, kerosene was needed to keep them warm.
• A man came to make a deal to buy a substantial amount of kerosene to resell it to his customers, so that he could make a profit. The store manager got angry and decided to give out kerosene to the store customers for free. He was worrying about if he would be fired because of his decision. He is now President of Daishin Store.

Actions to Revive Tohoku

• First, IRIS Ohyama decided to donate $3 million in funds and goods to the local community. The goods were very much appreciated by the people of the region.
• Second, the company decided to hire high school graduate students from hard-hit coastal areas to support young people.
• Third, the company tried to increase LED lighting to respond to the shortage of power supply. After the disaster, all nuclear power plants in Japan stopped their operations. Replacing traditional lights with LED would save about 50 % of the energy needed for lighting. To contribute to Tohoku and the entire society of Japan, it started a LED lighting business, and now IRIS Ohyama is ranked in the third position in the lighting industry in Japan.
• Fourth, the company’s CEO Kentaro created “Support Tohoku Mirai Initiative” to help local business leaders. Many people lost their jobs or businesses due to the disaster. Through a year-long session, the leaders were given guidance and advice. Many of them were encouraged to start local businesses.
• Fifth, the company decided to help farmers. Tohoku is famous for producing quality rice, so the company built rice refining facilities with new technologies, which could keep the freshness of cropped rice for years. With the technologies, rice in Tohoku is able to compete with rice from other areas.

• Akihiro Ohyama said that the company needed to help Tohoku more. The next challenge is expanding Tohoku products globally through its world-wide subsidiaries.

Recovery and Business Opportunities in Miyagi

• Yoshiyuki Takasago spoke about Miyagi Prefecture’s 1) infrastructure, 2) construction and development of new communities, and 3) restoration of Industries.

Infrastructure

• About 95 % of roads and bridges have been restored. The volume of container handling at ports has been returned to pre-disaster level. New community constructions are under way.

Building New Community

• Miyagi has two plans for community building. One is relocating residential areas to high ground and bringing industrial facilities to lower areas so that the residents are able to avoid the impact of tsunami. (See figure 1)
• Another is multiple defense systems in the southern area. The coastal area will be farmlands, and residential areas will be moved to inland areas. Seawalls, roads, and railways will work as levees against tsunami. (See figure 2)

• The population of Miyagi is about 2.3 million. About 320,000 people evacuated immediately after the disaster, and 47,000 people are still living in the temporary housing. Their home building has been undertaken by the government’s budget, and 8,000 out of 15,000 houses have been completed.

Restoration of Industries

• Takasago said that Miyagi’s challenge was to revitalize the industries while it was facing the declining population. About 6,000 people evacuated to outside of Miyagi and never returned.
• The local government has helped with expanding businesses to the global market. It facilitated Miyagi’s food fair in Los Angeles and sister state Delaware. It has also invited world conferences to Sendai City.

• Miyagi has invited domestic and foreign companies to open operations in the area. To encourage economic recovery, the Miyagi government has offered incentive packages such as tax subsidies and deregulations.
• Toyota Motor built a factory in 2011 that resulted in a growth of automobile related industries. Tokyo Electron also came to Miyagi in 2012. So far, more than 150 foreign companies have begun operating their businesses in Miyagi.

• Miyagi is located northeast of Tokyo, and it takes only 1.5 hours from Tokyo by Shinkansen bullet train, and five hours from Tokyo by car on the expressway. It has international ports and Sendai airport, which is going to be privatized to offer more efficient transportation services for business, logistics, and tourism.
• Takasago encouraged the audience to do business in Miyagi where low cost operation and high quality labor forces were available.


Ichiro Sone, Chief Executive Director
of JETRO Chicago



Akihiro Ohyama, CEO of IRIS USA, Inc




Yoshiyuki Takasago, Deputy Director-
General, Commerce, Industry and
Tourism Department of Miyagi
Prefecture Government