Toyota culls but upholds no-sackings tradition

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Hiroshi Okuda, the venerated Toyota boss, Japanese business-lobby chief and government counsellor, once said an executive who fired workers during a downturn should chuck himself out too.

Toyota has stayed true to Mr Okuda’s no-firings promise even after the great man’s retirement in 2006 and the onset of recession, unless you count the thousands of contract workers who have vanished from its payroll.

Temporary workers, once a rarity at blue-chip Japanese companies, proliferated during the country’s 1990s slump and many more were hired during the six-year recovery that began in 2002. Now, with the expansion over, those workers have become the first to be shown the door.

The hard-hit car industry is leading the cull. Toyota, where temporary employees accounted for nearly a third of Japanese production workers as recently as March, plans to cut its contract force from 9,200 in the first quarter of this year to about 3,000 in the same quarter next year.

On Thursday, Mitsubishi Motors announced 1,100 jobs would go. Nissan has cut 800, Mazda 1,300 and Isuzu another 1,400.

In the US, where Japanese carmakers view axeing jobs as politically dangerous, shift-shortening and short-term suspensions have sufficed. But foreign operations are under the microscope. Nissan has cut staff in the UK and Spain while Honda said it would give its 5,000 workers in Swindon an unpaid holiday next February and March.

Nuclear revival stalls

Days before the collapse of Lehman Brothers, EDF clinched its acquisition of British Energy. At about the same time, the French state-controlled electricity group tried – and failed – to counter investor Warren Buffett for control of a US electricity utility, Constellation Energy.

The moves seemed logical for a French champion of nuclear energy. With oil hitting record highs of nearly $150 a barrel and climate change pushing governments to promote investments in clean energy, the nuclear lobby felt confident that the industry was to enjoy a renaissance. The US and the UK – two countries that have committed to expand nuclear power generating capacities – seemed the new promised land of the nuclear revival.

Oil has since fallen, economies have gone into recession and energy majors are starting to review – and in some cases scaling back – projects decided during the good times. Even in the nuclear sector the mood seems to be changing. Areva, the other big French state nuclear champion, has postponed two projects this month because of economic uncertainties.

Together with its Canadian partners, it is delaying a project in Saskatchewan that was due to start mining uranium in 2010.

Areva, like EDF, remains convinced of the longer-term prospects of the US market for the development of new nuclear plants.

But they cannot help being somewhat cautious about the future. Barack Obama committed himself during the election campaign to clean energy and reducing CO2 emissions as well as making US energy supplies more secure. Nuclear energy would play a role but he never spelt out how big. His rival, John McCain, was more explicit. He said he wanted the country to be equipped with 45 new nuclear reactors by 2030.

Both Areva and EDF must also be feeling uncomfortable over prospects in the Chinese market after this week’s diplomatic falling-out between Paris and Beijing. Meanwhile, other countries are beginning to have second thoughts.

The Canadian province of Ontario was due to pick the winning candidate to build its planned new power station by the end of this year. It has postponed any decision until the end of March 2009. South African electricity group Eskom has also delayed giving the go-ahead to the construction of two plants by 2016 and a further 10 by 2025.

In these days of tight credit, electricity industry officials concede that there is a growing case for utilities across the world to reconsider their nuclear plans and turn to less costly gas and coal options.

The average cost of building a gas-powered plant is about 75 per cent lower than a new-generation nuclear one. In the case of coal, it is about 40 per cent less. Many expect technological advances in turning coal into a clean, or at least cleaner fuel will probably re-establish coal’s position in the energy equation.

If some of the markets that had shown the greatest promise for the nuclear industry revival seem to be stalling, the irony is that others that until recently appeared totally closed could start opening up. Italy shut down its nuclear programme in 1986. But the Berlusconi government is set to start consultations to revive a nuclear strategy for the country. A debate about expanding the role of nuclear energy has also begun in Spain.

A nuclear programme could be as good a way to stimulate the economy and create jobs in a downturn as reducing a country’s dependence on energy imports.

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