After absorbing a record annual loss in 2009, the Hitachi Corporation underwent a dramatic transformation, and soon swung itself to profitability. In March 2012, the company reported a record $4 billion in net profit, but as the New York Times reports, this windfall has had little impact on Hitachi, Japan — the city of 190,000 and longtime epicenter of Hitachi manufacturing. In fact, Hitachi's corporate resurgence has had a crippling effect on the city, where abandoned factories and high unemployment stand as the only remnants of a once-bustling domestic industry.
In many ways, the city's decline speaks to stark economic realities facing the Japanese electronics industry as a whole. Over the past decade, titans like Panasonic, Sony and Hitachi have seen profits plunge in the face of stronger price-depressing competition from Taiwan and South Korea. The strong yen, meanwhile, has only made it more expensive for Hitachi to export its products, and has raised the cost of doing business across the country.
Hitachi's gain is Hitachi's loss
Disaster seemed imminent in 2009, when Hitachi reported a staggering $9.2 billion loss at the height of the global financial crisis, but the company eventually rebounded by cutting costs and streamlining operations. Since 2010, when Hiroaki Nakanishi took over as President and CEO, Hitachi has slashed or sold off several of its less profitable ventures, including its domestic television and hard disk drive businesses. The company has gradually moved away from consumer electronics as a whole, choosing instead to focus on industrial machinery, power generation, and other infrastructure projects.
At one point, Hitachi employed nearly 400,000 people. Today, that number has dwindled to 323,500 — a third of which are based overseas. This more globalized strategy has had a particularly deleterious effect on the city of Hitachi, where population and manufacturing jobs have each declined by about 20 percent over the last ten years. The city's only department store closed its doors in 2008, and there aren't even any movie theaters.
It doesn't seem like the city's fortunes will be changing anytime soon, either. Hitachi is planning to streamline operations even further going forward, raising the specter of continued job losses at home. Nakanishi, for his part, acknowledges the difficulty in shuttering factories and laying off workers, but insists that it's critical to the survival of his company. "Closing plants in Japan is a big deal, and we don’t take cutbacks lightly," he told the Times. "But to return to growth, we have to cut loose what doesn’t bring profit. We have to be decisive."
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