The workers at Miyafuji Industrial Co. never gave up even after all 30 of their welding machines were flooded by a 2.5-meter tsunami spawned by the Great East Japan Earthquake a year ago.
The workers at Miyafuji Industrial Co. never gave up even after all 30 of their welding machines were flooded by a 2.5-meter tsunami spawned by the Great East Japan Earthquake a year ago.
The plant equipment maker, based in Ishinomaki, Miyagi Prefecture, had to scoop out enough sludge to fill 60 4-ton trucks before it restarted operations on March 23.
Now, Miyafuji Industrial is humming with orders from factories of large companies and for repairs of damaged bridges.
Work volumes, 20 percent higher than pre-disaster levels, are expected to increase further as the company acquires new equipment with government subsidies.
“Precisely because we reached the lowest of lows, we thought that we could not get discouraged,” said Haruo Goto, 65, the company president.
Like Miyafuji, the Japanese economy is emerging from the destruction caused by last year’s earthquake and tsunami.
The industrial production index, which fell to 82.7 in March last year, rose to 92.6, or about 95 percent of pre-disaster levels, in June as parts suppliers in the Tohoku region recovered.
However, the economy was dealt a blow from electricity shortages following the suspension of nuclear power plants, flooding in Thailand and the yen’s appreciation caused by the sovereign debt crisis in Europe.
Now, many indexes of the nation’s economic activities are approaching levels before the March 11, 2011, disaster.
Government spending is contributing to the economic recovery in the devastated Tohoku region.
In Miyagi, Iwate and Fukushima prefectures, the value of partial advance payments for public-works projects has been exceeding year-earlier levels substantially since October.
While the Tohoku region appears to be experiencing bubbles created by the huge public spending, the benefits are expected to spread nationwide through projects to make school buildings more quake-resistant and repairs of roads and bridges.
Nomura Securities Co. estimates that public spending for rebuilding projects will increase the nation’s gross domestic product by 1.9 percentage points on a real basis.
Private-sector investment is also on the rise.
In the October-December period, companies spent 7.6 percent more on domestic plant and equipment than a year earlier, the first increase in three quarters, according to a government survey.
Corporate investments rose as auto and other plants damaged by the disaster have recovered and supermarkets and drugstores opened new outlets.
“We have improved efficiency by introducing more productive equipment,” Yoshio Haga, president of Nippon Paper Group Inc., said of the company’s damaged Ishinomaki Mill.
Personal consumption has also shown signs of recovery.
In February, 520,000 new vehicles were sold in Japan, nearly 30 percent more than a year earlier, led by small cars eligible for subsidies for eco-friendly vehicles reinstated in December.
Electricity-saving products helped consumer spending per household increase 0.5 percent from a year earlier in December, for the first rise since the disaster.
“An uptick in consumption is important for rebuilding,” said Hiroshi Onishi, president of department store operator Isetan Mitsukoshi Holdings Ltd.
Many private-sector research institutes forecast the economy will hit a peak in the April-June period of 2012, backed by 19 trillion yen ($231 billion) in four supplementary budgets in fiscal 2011 and the rebuilding-related budget in fiscal 2012.
The amount is equivalent to 4 percent of Japan’s GDP.
“The economy will improve in the latter half of the year because stock prices have slightly recovered and the yen’s appreciation has eased,” Ryuji Yamada, president of NTT DoCoMo Inc., said.
On March 9, the Nikkei 225 index, the benchmark of the Tokyo Stock Exchange, temporarily regained the 10,000-point level for the first time in about seven months. The yen has been trading above 80 yen against the dollar since late February.
Twenty-three percent of private-sector companies expect rebuilding-related demand for their operations, according to a survey by credit researcher Teikoku Databank Ltd.
Despite the brighter signs, concerns remain.
Electricity shortages caused by the suspension of nuclear power plants remain unsolved. A hike in electricity rates is expected while crude oil prices have been rising.
In addition, the nation is expected to lose more production bases as manufacturers try to survive international competition.
The ratio of overseas production in the manufacturing sector is expected to rise from 18.4 percent in fiscal 2011 to 22.4 percent in fiscal 2016, according to a Cabinet Office survey.