More Japanese firms across the country are suspending or reducing their manufacturing operations as the pandemic puts a major dent in sales, according to a second survey by the Japan External Trade Organization that heavily weights firms in the Southeast U.S.
The trade and investment agency’s second “quick survey” compiled 1,048 responses from Japanese-owned subsidiaries from April 6-8, including 367 in the region covered by its Atlanta office. More than half of overall respondents were manufacturers.
More than 70 percent of them were operating at below capacity, an increase from the 54.2 percent tracked in an original survey in late March that offered a glimpse into how many were handling the abrupt transition into a remote-work model.
More than half of manufacturers surveyed in the latest poll (and 43.5 percent overall) saw their businesses deemed “essential.” Some, like Kubota’s plants in north Georgia, have ramped back up after a short hiatus, while others have extended closures or instituted new ones amid the pandemic.
Beyond health concerns, most simply cited reduced demand trickling down from upstream producers, particularly like automotive OEMs. Only 5 percent of respondents have seen sales increase during this time, while 40.5 percent saw numbers go flat. More than half experienced sales declines.
For those in that last category, the impact has been drastic — 23.3 percent had seen a drop of more than 50 percent, while another 44.3 percent had seen declines in the range of 20-50 percent.
In a letter, officials in JETRO’s Atlanta office said they were continuing to help companies cope with the effects of COVID-19.
“All of our JETRO offices have been working around the clock, though presently from our homes, to communicate with Japanese companies that have been impacted thus far,” Chief Executive Director Takuyi Takahashi wrote.
In the latest survey, only a quarter of Japanese-owned firms said they planned to take advantage of government programs; more worrisome was the 15 percent weren’t aware of the programs or didn’t know how to apply.
That echoes findings of the earlier poll, in which many firms were mystified as to whether SBA initiatives like the Paycheck Protection Program and the Economic Injury Disaster Loans were available to foreign-owned firms — some requested information be made available in Japanese.
In response, JETRO put together a state-by-state resource page, but the survey still indicated widespread confusion about the patchwork of regulations, stay-at-home orders, financing requirements and travel restrictions they face, which vary by jurisdiction.
“We are not sure when we could reopen our production facilities. Since the duration of the stay-at-home order varies by state, we have concerns on how to operate our own facility even after the end of the order, when our suppliers located in another state cannot operate,” one comment reads.
Another reported challenges collaborating with other company facilities in Mexico:
“We were told our factory in Mexico cannot operate since it is not ‘essential’, but it is difficult to determine whether that is really true.”
So far, there has not been a mass exodus of Japanese expatriates from the U.S. Only 30 percent of companies had plans for Japanese staffers to return home on a temporary basis. Half had no plans, while 20 percent offered but had no employees take them up on it.
That could be because of the uncertainty around mandatory quarantines and the effect of leaving on employees’ visas. One respondent reported being unable to schedule an interview to renew a visa that expires in May.
“I have to carefully decide when we could return since it is mandatory to self-quarantine for 2 weeks when entering Japan and also when re-entering the U.S. Since our clients in Japan cannot travel to the United States, it makes it difficult to operate.”
A third of companies reported being concerned for employees’ mental health and instituting new programs like virtual happy hours, photo contests or increased videoconfering and phone calls.
The Japan-America Society of Georgia has also aimed to do its part to keep companies informed through its executive webinar series that so far has focused on manufacturers, universities and medtech companies. View past events here
Japanese companies operate more than 600 facilities in the state employing more than 30,000 Georgians.
See the full survey and results here.
Contact the JETRO Atlanta office at ama@jetro.go.jp.