Most Japanese companies operating in the U.S. have had to cut production as sales have fallen amid the pandemic; still, a large majority are retaining their workers or offering options that could allow them to quickly come back to work once things recover.
That’s the finding of the Japan External Trade Organization’s most recent “Quick Business Survey” published May 1 but circulated via email May 15.
Nearly 70 percent of the 954 companies surveyed April 28-30 (about a third of them in the Southeast U.S.) planned to maintain their current levels of employment, even as 80 percent of them have suspended operations or reduced production mainly to cope with declining sales. A third of respondents had seen their sales drop by more than 50 percent year on year.
Of the 30 percent of companies forced to let least some workers go, half allowed unpaid furloughs that kept contracts and benefits in place. Only a quarter out of this minority of companies laid off workers, while others allowed them to bridge to the resumption of operations using existing or extended paid time off.
The strategy squares well with what some manufacturers said during a Japan-America Society webinar early in the pandemic: That they would pull out all the stops to keep skilled workers who have traditionally been hard to find. [Read: How Japanese Firms Are Managing Covid-19 and the Rapid Shift to Remote Work]
Only about 10 percent of companies saw supply-chain disruptions, facing difficulty getting parts from places like the U.S., Mexico and Southeast Asia, hinting that global value chains may be mending.
Japanese firms overall remained relatively optimistic about the U.S. Only 20 percent are considering reducing their presence here in 2020, while 63 percent aim to maintain their operations. A minuscule 0.1 percent are planning to withdraw completely, while 6.3 percent hope to expand.
Still, they need more information about how to navigate the resumption of business, including sanitary measures, and access resources: Only 30 percent had applied for the Paycheck Protection Program, and many were turned down. One was deemed ineligible because the subsidiary owner had no credit history in the U.S., while another was told it didn’t qualify because it had more than 500 employees worldwide.
“I would like to apply for PPP but local US banks are prioritizing existing customers. Since Japanese banks in the US are not qualified to handle PPP, we could not apply,” one respondent wrote.
Seven out of 10 Japanese firms were waiting for the lifting of stay-at-home orders to do business, even though half were deemed “essential businesses” amid the pandemic. About half of companies also listed “defining guidelines around reopening” as another challenge to their business.
Through its network of six offices in the U.S., JETRO is working with a variety of vetted service providers to help Japanese firms address these and other issues, while publishing information in Japanese about business-support measures.
“As we tackle the containment of COVID-19 in the United States, it is JETRO’s primary duty as a bilateral trade and investment organization between the US and Japan to maintain a deep level of interactions with Japanese companies throughout the country, during these uncertain times,” JETRO Atlanta Chief Executive Director Takuya Takahashi said in releasing the survey. “All of our JETRO offices have been working, though presently from our homes, to communicate with Japanese companies that have been impacted in America.”
Watch the full JASG webinar here: