A year after killer tsunami, Sony factory faces tough reality

The factory earned praise from executives and the community for its heroism, but now is confronted with job cuts and a tough economy

By Jay Alabaster, IDG News Service |  Consumerization of IT

"This will help reinvigorate the business community," said Hitoshi Ishikawa, an official at the Miyagi Organization for Industry Promotion, which manages the site. "It's very rare for a company to do this."

Unfortunately for some workers, the space on the factory floor became available because Sony is scaling back its own production at the factory. It also made battery electrodes and optical components for projectors before the disaster, but production has been shifted elsewhere. Employment at the Tagajo plant, which was over 1,000 previously according to media reports, had been slashed to 900 as of January.

So the same local employees that were praised by Sony's CEO are now being laid off, for some through the company not renewing their contracts. This is common in Japan for large companies, and can avoid the stigma and legalities of outright firings. Earlier this month a protest march was held near the factory, and organizers said about 300 people showed up.

"They are using the disaster as an excuse to let people go," said Shinni Otomo, a local union representative.

A Sony spokesman said the cutbacks were made as a result of the shift in production.

Sony is facing $3 billion in losses during the current fiscal year that runs through this month, weighed down by one-off costs like the earthquake and flooding in Thailand, but also because it is struggling in a tough economy where consumers have plenty of options from foreign competitors. Incoming CEO Kazuo Hirai, who will take over from April, has not ruled out more job cuts.

All along Japan's coast, a similar dynamic is unfolding. For residents that banded together in the days and months after the disaster, the adrenaline of surviving the first year is fading, and they are again faced with the reality of a stagnant economy.

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