Draw blueprint for Toshiba revival; develop competitive, original technology

Days after Harry-Meghan wedding, Markle's ex-husband gets engaged
Days after Harry-Meghan wedding, Markle’s ex-husband gets engaged
I was enjoying my struggle in Bollywood, says Vicky Kaushal

Draw blueprint for Toshiba revival; develop competitive, original technology

The Yomiuri ShimbunToshiba Corp., a prestigious company that was mired in turmoil, has taken its first major step toward resurgence.

Will Toshiba become a model case for Japanese industrial revitalization? Its strategy for boosting profitability will be tested.

Toshiba has completed the sale of its subsidiary for semiconductor memory production, Toshiba Memory Corp. The sale has earned Toshiba somewhat less than ¥1 trillion in profits, a development that has pulled the corporation out of its financial crisis.

In 2015, Toshiba’s inappropriate accounting procedures came to light, and three successive top officials had to resign. Later, the corporation had to post massive losses due to the failure of its nuclear business in the United States, and it fell into financial difficulties.

Toshiba’s management must not relax their reform efforts, remembering their lessons from the past.

Toshiba’s earning power compares poorly with those of its rival corporations. Its operating profits in the business term ending in March 2019 are expected to account for only about 2 percent of its sales figures for the same period. Toshiba falls way behind Hitachi, Ltd. and Mitsubishi Electric Corp., with the figures for both companies standing at about 7 to 8 percent.

Toshiba’s top management had every reason to announce a policy of striving to first improve the company’s efficiency, regarding its high-cost structure as a problem.

It is worrying that a source of earnings cannot be found within Toshiba to replace Toshiba Memory, which earned 90 percent of the corporation’s entire operating profits.

From now on, the main line of Toshiba’s business will be water supply, railway construction and other infrastructure businesses, as well as the energy business, including thermal power generation equipment production. There is fierce price competition in those business fields, and it will be difficult for Toshiba to expect large profit margins.

Cultivate new growth fields

The same is true of Toshiba’s nuclear business, the mainstay of its business operations. The corporation is going ahead with plans to withdraw from overseas markets, and its current main operations are such work as decommissioning the Fukushima No. 1 nuclear power plant.

Toshiba needs to conduct aggressive business management that will cultivate new growth fields, not just reducing its expenditures and implementing other defensive measures.

As a result of a capital increase through a third-party allocation of newly issued shares in December, Toshiba sees foreign funds and many other activist shareholders in its list of stockholders. There will be even greater pressure for a short-term profit increase.

Toshiba’s management should swiftly present a blueprint for its future outlook.

Doing so will relieve the anxiety of as many as 130,000 Toshiba employees and the company’s business partners. A task facing Toshiba is how to prevent the outflow of excellent human resources.

Success or failure in Toshiba’s revival will be the test of whether Japan’s manufacturing technology, which some say is weakening, will be brought back to life.

With its sale completed, Toshiba Memory will seek renewed growth under a Japan-U.S.-South Korean consortium led by U.S. investment fund Bain Capital.

The memory chip business, which entails a rapid cycle of technological innovation, is a severe world where there is a need for capital investment totaling at least hundreds of billion yen annually. There are also violent ups and downs in corporate performance, depending on the state of the semiconductor market.

Concerns have been voiced about the harmful influence that may be caused by the potentially odd mix of Japan, the United States and South Korea in the consortium. Efforts should be made to facilitate smooth communication, thereby developing competitive, original technology.

(From The Yomiuri Shimbun, June 3, 2018)Speech


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *