Japan Ponders Its New Normal

Their boats washed away by the tsunami, fishermen in the town of Higashi-Matsushima say they will start over, but on a smaller scale.

And with electricity still in tight supply from the Fukushima Daiichi nuclear crisis, a landmark building in Tokyo has dimmed its famous lights.

Across Japan, there is a shared realization that the natural and nuclear disasters unleashed on March 11 have exposed the fragility of Japan’s postwar economic order — and that a recovery will not be a return to the status quo.

The disasters have dealt another blow to a manufacturing sector already battered by cheaper rivals, deepening fears of a “hollowing out” of Japanese industry long feared in this country. Japan’s aging, shrinking population will also make an energetic bounce-back more difficult. And Japan’s economy relies heavily on precarious nuclear energy, for which alternatives are likely to be more expensive.

Rebuilding will require a national rethinking if Japan is to achieve an economic rebirth, rather than sink further into the stagnation that has plagued it for two decades, many experts say. And reconstruction will define the nation’s place in a global order where Japan is no longer the rising economic star of a generation ago.

“We cannot have recovery for recovery’s sake,” said Hiroko Ota, a former economy minister and vice president at the National Graduate Institute for Policy Studies. “We must make this the starting point for a new economy.”

Japan is no stranger to disasters and rebuilding. Its economy largely shook off the effects of a disastrous quake that struck the city of Kobe in 1995, thanks to an all-out recovery effort.

But even compared with the Kobe crisis, Japan is a weaker nation that now faces the task of reconstruction.

The average age for the population has advanced since then by about six years — to 44.6 years in 2009, which weighs on economic growth and means mounting medical and pension payouts. And the Japanese government is saddled with a public debt more than twice the size of its economy, limiting its spending options.

“In many ways, this is an unprecedented disaster,” said Takayoshi Igarashi, a professor in politics at Hosei University in Tokyo and a member of a council the government has asked to draft a long-term reconstruction plan. “Japan is at a crossroads.”

So, it seems, is Japanese manufacturing.

Take Meiko Electronics, which supplies circuit boards to some of the world’s biggest makers of smartphones. Soon after the quake and tsunami ravaged Meiko’s circuit board factory here in Ishinomaki, mangling machines and sweeping a mountain of debris onto the factory floor, officials at the company knew its days of manufacturing in its home country were limited. A second Meiko factory was also damaged.

Meiko already makes 80 percent of its parts overseas. With the damage to two of its five Japanese factories — and the uncertainties of Japan’s power supply — it does not make sense to rebuild in the country, said Hidetaka Maruyama, a company spokesman.

“Without a doubt, there will be a shift toward production overseas,” he said. A new factory in Wuhan, China, completed in April, has already started producing many of the most sophisticated Meiko circuit boards once made in Japan.

To be sure, government surveys show that many manufacturers have rebounded quickly in the quake’s aftermath. But analysts warn that even a short hiatus in Japanese output, and electricity disruptions, are enough to give overseas competitors an opportunity. And the disaster has shown that even some of the country’s biggest multinationals remain dangerously dependent on domestic suppliers, a realization that could spur more corporations to move production offshore.

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