Japan's Deceptive Downturn

...On production lines, the shift made by manufacturing industries to greater automation has resulted in fewer layoffs during hard times...

...Tsukimura's feeling is shared by Hi-roshi Yamamura, chief economist at the NLI Research Institute, a division of Nippon Life Insurance...

...In Europe, meanwhile, despite a hostility to imports from Japan, this country's major producers of autos, electronics and hightech components are positioning themselves to take advantage of the coming Single Market...

...The government is reportedly considering a supplementary budget to be passed sometime this summer...

...Similarly, the president of the Mitsui Marine and Fire Insurance Company abandoned old-fashioned references to samurai spirit and told his newcomers he wants them "to have the spirit of Christopher Columbus, who achieved his great adventurous success through bravery and perseverance...

...About 60 per cent of that money, he continues, has gone into improving the technology and productivity of top industries...

...It will take four or five times that amount to produce real results," says Jesper Koll, an economist at S.G...

...Warburg Securities' Tokyo office...

...A few weeks later, the Tokyo Stock Exchange's Nikkei index fell to its lowest level in five years, and the slide continues...

...The recession may one day be appreciatively remembered as having given the country a more dynamic corporate system...

...Rejecting the conventional wisdom, he anticipates a 0.4 per cent decline in GNP this year, which would be the first such drop since 1974...

...We had slumps during the oil crises in the 1970s," says Riichi Ono-dera, who runs a small auto parts production facility near Tokyo, "but I've never experienced anything as tough as this...

...To illustrate, he cites liquid crystal displays, a multi-billiondollar market: "You see them on laptop computers and displays of all kinds, and in the future, hundreds of new products will be using them...

...Now, a buildup of unsold products—everything from rice cookers to office computers?has forced large manufacturers to cut back output, and that has meant a sharp decrease in orders for their networks of suppliers...

...Most analysts here believe that although repairing the damage done will be painful, it will essentially involve three to five years of sluggish growth...

...Tetsuo Tsukimura, chief economist at the Tokyo branch of Smith Barney, Harris Upham, disagrees...

...In the years when many prominent U.S...

...Instead of simply showing loyalty to the company, I hope you learn and experience things, so you can have your ownideas," said Hitoshi Kojima, president of one of the country's most bureaucratic entities, Nippon Telegraph and Telephone Corporation...

...But Japan's primary efforts at the moment are being directed inward...

...In a Los Angeles Times interview, he further pointed out that as Japan absorbs fewer imports and sends less capital abroad, its slump is bound to affect other nations...

...But recession has a somewhat different look here than it does in the United States...

...That would still be well below the previous target of 3.5 per cent, but few industrial nations would scoff at the revised figure...

...Another factor contributing to Japan's low jobless rate is the willingness of employees to make sacrifices...

...A significant feature of the increased government spending to spur the economy will be a host of new infrastructure pro-jects, including highways, housing, "supertrains," and recreational sites...

...One major reason is that a booming service sector today employs more than 40 per cent of all workers and is least affected by slower growth...

...There are only four in the United States, and there is one rather shaky operation in Europe...

...After more than 15 years of uninterrupted economic growth, the country's gross national product actually shrank by 0.2 per cent in the final quarter of 1991...

...by about 25 per cent...

...Eventually, the infusion of money should stimulate consumer spending, which now accounts for only 56 per cent of GNP, compared with 68 per cent in the U.S...

...The dramatic scenes of well-dressed Americans standing on line in the dead of winter to apply for jobs at Chicago's new Sheraton hotel are worlds apart from Tokyo...

...Despite fiscal and monetary measures initiated by the government and the central bank, there has so far been little positive response, either in the marketplace or among economic analysts...

...executives were rewarding themselves with salaries and bonuses comparable to those of major league baseball stars, companies here were pouring funds into finding more efficient forms of manufacturing and development...

...The Japanese being hurt are generally subcontractors...

...The old saying that "Japan cannot live without America" is indeed beginning to ring hollow...

...In this capital and other cities, those hardest hit by the economic downturn are mostly day laborers from places like Iran and Bangladesh, people who compete for work that most young Japanese spurn as dirty, dangerous and difficult...

...Recession has come to Japan...

...Though some Americans fear that Japan's early stages of economic recovery will bring a new wave of exports, the evidence suggests that destinations are changing...

...Much of the recent investment, Courtis explains, "has been directed to establishing facilities for products and services that Japanese companies were not even involved in a decade ago...

...Working the market" is no longer a sure-fire money-raising strategy for everyone from corporate financiers to political aides using insider information to swell their bosses' coffers...

...Most firms here have begun to switch their emphasis from U.S...

...Since they peaked in December 1989, the average value of leading issues on the Tokyo exchange has dropped over 50 per cent...

...The chairman, vice-chairman and president of Fujitsu, for example, will make 35 per cent less in the fiscal year that began April 1, while the salaries of 29 other top managers will be reduced 15-25 per cent...

...In fact, the national jobless rate actually dropped to 2 per cent in March...

...Nevertheless, the optimists see Japan's business leadership as poised to repeat past performances and turn a negative into a positive...

...Japan's economic deterioration," he said, "will prevent an American recovery and undermine Asia's growth...

...At present there are 52 Japanese companies making LCDs...

...The problems burdening Japan's economy are said to derive largely from the excesses of the late '80s, when stock prices doubled in 18 months and land values increased at an annual rate of 23 per cent...

...This, in turn, led to unsound investments and an unhealthy price spiral...

...Yet unlike the U.S., where unemployment has pushed upwards of 7 per cent, there are no lines of desperate Japanese hoping to find work...

...For decades they have been the hidden strength of the nation's resilient, competitive economy...

...Faced with a world market slump in computers and semiconductors, four giant Japanese electronics companies recently announced that their top executives would take pay cuts...

...When the economic upturn does occur, it is maintained, the inherent strengths of Japanese big companies will assert themselves...

...Gone is the blind faith in the inevitable rise of share prices characteristic of the late '80s...

...Courtis calls the low Japanese number "an ocean of pent-up demand...

...If the labor market looks bright relative to the U.S., however, investors in the stock market here can only envy the bullishness on Wall Street...

...He predicts that this will be "the worst recession in postwar Japan...

...Until we see clear signs that the economy is recovering," says a manager at one of Japan's life insurance firms, "we won't begin buying...

...markets to the more lucrative ones of East Asia, where Japanese investments have already led to solid contacts among local producers and distributors...

...The views of both men underline a global reality that few Japanese politicians appear to fully grasp—namely, that the world's economies have become increasingly intertwined...

...Not once in a quarter of a century has Europe or the United States invested, as a portion of GNP, as much as Japan," observes Kenneth S. Courtis, vice president and senior economist at the Tokyo office of Deutsche Bank Capital Markets Asia...

...Michael Berger frequently contributes to The New Leader from Japan...

...On a different level, there has been a distinct change this spring in the tone of the addresses Japanese executives traditionally deliver to new employees...

...A pump-priming package of some $7 billion in extra government spending in the first half of the current fiscal year has been criticized as too little, too late...

...Last year, trade with Asia exceeded that with the U.S...

...Rather than invest overseas," he notes, "we are focusing on domestic needs...

...Whether or not it will be achieved is a subject of considerable local debate...

...Encouraging independent thinking is a radical departure for Japan's business community...

...In addition, 4,700 middle managers will have their annual pay raises put on hold until business picks up...

...Tokyo claims it would add 1.1 per cent to Japan's GNP and assure a growth rate of 2.4 per cent for '92...