In the Tankan (Short-Term Economic Survey of Enterprises) released by the Bank of Japan, the index that indicates the economic judgment of large companies in the manufacturing industry has deteriorated for the third consecutive quarter.
Focusing on an interview survey conducted by a Shinkin bank in Tokyo in September, we interviewed companies about how they are being affected by soaring raw material prices and the rapid depreciation of the yen and how they are responding.
Interview survey: 84% of respondents said they could not pass on the price, more than half said they were affected by the depreciation of the yen.
Jonan Shinkin Bank, which has its head office in Shinagawa-ku, Tokyo, asked its 670 small and medium-sized business partners about the effects of soaring raw material prices and the rapid depreciation of the yen on their management in September. I visited the place directly and asked.
Among them, the owner of a Chinese restaurant in Shinagawa Ward said, ``The number of customers has decreased due to the corona virus, and the cost of purchasing imported ingredients has increased due to the weak yen. It's not going up and prices are going up, so I'm going to have to defend my life.I'm worried about the future."
In addition, the president of a steel wholesale company in Shinagawa Ward said, ``Since all products are imported, prices have risen due to the weaker yen, and electricity and gasoline costs have also increased. However, even though our business partners understand the situation, it is the current situation that they do not fully accept it," he explained the difficult situation.
According to the survey, while only 8.8% of companies responded that they were able to pass on the increase in purchasing costs to prices, they said, "Not at all," "Almost not," and "Partially not." A total of 84% of companies responded.
In addition, when asked to what extent the sudden depreciation of the yen has affected company earnings, 10.8% answered that it had a "serious adverse effect," while 42.8% answered that it had a "somewhat adverse effect." More than half of the companies answered
Kyonan Shinkin Bank Chairman Kyoji Kawamoto said, "Corporate sales are on a recovery trend after the spread of the new coronavirus has subsided, but many companies have not been able to secure profits because they have not been able to pass on the rising prices of raw materials. It's not a problem that can be solved with just one, so we're taking measures such as introducing suppliers who can get raw materials cheaply."
Yen depreciation is also a factor in rising costs for emerging market currencies
In addition, companies around the world are continuing to explore various possibilities.
Since 2000, a food manufacturer headquartered in Kuwana City, Mie Prefecture has been producing retort pouches of curry and other products at its subsidiary in Thailand, importing them and selling them in Japan.
However, according to the company, the prices of many raw materials have skyrocketed, and in particular, the average local wholesale price of chicken, the main ingredient, has risen by 20 to 30% compared to two years ago.
In addition, this manufacturer purchases and imports products manufactured by a local subsidiary in Thai currency "Baht".
In September last year, 1 baht = about 3.3 yen, but in September, 1 baht = 3.8 yen, and the yen has depreciated, which is a factor in increasing costs.
The manufacturer decided to raise the price of curry and other products on August 1st, but in order to keep the price down while maintaining quality, it is considering reviewing the raw materials and making the product package 2 mm thinner to improve the efficiency of marine transportation. I'm trying to make a lot of ingenuity, such as raising it.
Keisuke Mitsubayashi, president of Yamamori, a food manufacturer, said, ``If we raise prices, there is a risk that we won't be able to sell, so we will make corporate efforts to pursue price increases that will satisfy consumers.''
30,000 yen monthly “price allowance” to motivate employees because of adversity
Even a manufacturer with 15 employees that develops highly functional ceramic products used in water purifiers and health-related products in Chikuma City, Nagano Prefecture, is suffering from the impact of high prices.
About 30% of the materials, such as natural ores that are indispensable for products, are imported, so the purchase price has increased by nearly 20% compared to 2019 before Corona due to the record depreciation of the yen.
In addition, as the price of energy rises, the cost of heating and lighting for furnaces used in manufacturing and the cost of fuel for vehicles used in sales are also increasing.
Furthermore, because of the high prices, manufacturers to whom we consign companies request price increases, while sales agents point out that if we raise the prices of our products, our selling power will decline.
The company, which decided to face the headwinds even in a difficult situation, has been providing a monthly "price allowance" of 30,000 yen to support the household budget of employees who are suffering from high prices since July in an attempt to motivate employees.
As a result, the motivation of our employees has increased, and we hold weekly meetings in front of the president to propose new products, and work together to develop products with high profit margins.
An employee said, "A relaxed lifestyle leads to a relaxed mindset, which allows me to devote myself to my work. Even though the company is in a difficult situation, the company will provide me with allowances, so now it's my turn to make a profit and contribute."
Yoshio Sato, president of Nagano Ceramics, said, "In this difficult time, a monthly allowance of 30,000 yen is a lot of money, but now is the time to develop new products and bring them to the market with the 'everyone's baseball'."