Toshiba and Hitachi need to overcome the nuclear reactor crisis in Fukushima
Lee Jay Walker
Modern Tokyo Times
The ongoing crisis in Fukushima is creating sleepless nights for the management of Toshiba Corp. and Hitachi Corp. in the nuclear divisions of both companies. These two companies were behind the design of the stricken Fukushima Daiichi nuclear plant but unlike Tokyo Electric Power Co. (TEPCO) they appear to have escaped the flak from the mass media.
The operator of the plant, TEPCO, is deemed to be responsible for the disaster which is currently ongoing because major radiation problems still exist at the Fukushima Daiichi nuclear plant.
However, the collective reality of government support, local government support, failed nuclear watchdogs, the nuclear agency in Japan, and the creators of the nuclear plant, Toshiba Corp. and Hitachi Corp., are in the mix because it is not only TEPCO which must be held accountable; irrespective if the operation came under the control of TEPCO.
The nuclear sector in Japan was seen to be highly developed and Toshiba Corp. and Hitachi Corp. had expanded their global operations in order to enhance this sector in Japan. At the same time the government of Japan helped to further the cause of this sector when talks were underway between national governments and possible nuclear plant contracts.
Takeo Miyamoto, Deutsche Bank AG, stated that “Any plans to export all-Japan nuclear reactor projects will be delayed.” Takeo Miyamoto also commented that “Improving the safety of the type of reactors involved in the Fukushima accident will take time and Tepco’s crisis management methods are being questioned.”
After the earthquake and tsunami hit Japan it led to the radiation crisis in Fukushima and the shares of Hitachi and Toshiba have plunged drastically. However, it is fair to say that many other companies have also suffered from a share price dip but for Hitachi and Toshiba the factors are based on the current reality of events at the stricken Fukushima Daiichi nuclear plant.
Areva SA (CEI) which is based in Paris and Dongfang Electric Corp. of Chengdu in China will probably gain in the short-term from the current crisis in Japan. Both companies are involved in developing sturdier facilities and clearly both Hitachi Corp. and Toshiba Corp. are going to face image problems and the same applies to the nuclear sector in Japan.
Yuichi Ishida, Mizuho Investors Securities Co. (Tokyo) commented that “The myth of Japan’s nuclear safety is dying.” Yuichi Ishida also continued by stating that “Until now, Japanese reactor makers had a track record free of serious accidents.”
In 1999 you did have a nuclear crisis in Ibaraki at Tokaimura but the accident was not so dramatic when compared with recent events at the Fukushima Daiichi nuclear plant.
Prior to the earthquake and tsunami which hit Japan both Toshiba and Hitachi had high hopes in this sector. Toshiba is the largest supplier of reactors in Japan and they had hoped to win 39 units within the next four years. Hitachi had hoped to win many new power plant contracts and their long term target was to have around 33% of the global market share by 2030.
However, given the current climate then it will be difficult for both companies to reach their targets.
It is not all doom and gloom because Vietnam on March 14 confirmed that it would work tightly with Japan and partners with regards to the construction of nuclear power plants.
Likewise, Turkey also confirmed that they will continue to talk with Toshiba and others on building a nuclear plant. Therefore, developing nations in the nuclear sector are still open to Japanese companies but clearly it will not be plain sailing.
The longer the crisis in Fukushima goes on then the more damage it will cause to this sector in Japan and many nations like Germany are asking serious questions about the nuclear crisis in Fukushima.
Areva have developed a new system and their EPR reactors have four independent safety sub-systems and this safety mechanism is seen to be the future of the next generation.
Therefore, companies based in France and China may gain from the current crisis in Japan but this market will be problematic because all contracts will be heavily scrutinized given the current situation in Fukushima.
However, the nuclear sector will continue to be a force in the energy sector and this applies to the climate change problem and a host of other factors.