SÃO PAULO Japanese steelmakers have a number of systemic challenges ahead, including tough regulations, sky-high energy prices and the increasing loss of its automotive industry.
"Electricity is one of the negative factors which prevents growth in the future. ... The central government is trying to start up a number of nuclear (power) plants, but local government is taking a very cautious position," JFE Steel Corp. president and chief executive officer Eiji Hayashida told delegates at the World Steel Associations annual conference in São Paulo. "As a result, the price of electricity is going up and will also go up in the future."
Steelmakers also face high corporate tax rates and regulation on employment, which is limiting growth.
Hayashida said that while Japanese exports will "certainly have a contribution to the recovery of the economy," its automotive industry is starting to shrink, due mainly to a strong currency rate. "They have already shifted the production base from Japan to overseas, and that will never come back," he said.
However, the Japanese industry is far from grim. With a more stable government in place, along with stronger government action on fiscal policies, there could be bright spots ahead, Hayashida said.