Japan’s faded industrial titan selling family silver

Fall from grace for Toshiba

TOKYO, Sept 14, (AFP): At a train station used by hundreds of workers at struggling Japanese electronics giant Toshiba, an advert is apparently trying to poach staff worried by their employer’s precarious financial position.

“Do you work for ‘that’ electronics company? If so, come and work for us!” screamed the ad for Toyota.

The mere fact Toshiba staff are apparently being urged to jump ship by rivals underscores the difficulties suffered by the former industrial titan.

Strapped for cash, the firm is soon expected to be forced to sell off part of the family silver — its key memory chip business, which accounts for around a quarter of its total annual revenue.

Toshiba has been stuck in tortuous negotiations over selling the segment, which could raise as much as $20 billion.

Three parties have been vying for the prize: a US-South Korean consortium led by investment fund Bain Capital, Toshiba’s US chip factory partner Western Digital and Taiwan’s Hon Hai Precision, better known as Foxconn.

On Wednesday, Toshiba said it had signed a memorandum of understanding with the Bain consortium but this did not prevent them still talking to others.

Selling the profitable chip division is seen as key to Toshiba’s survival, as one of Japan’s bestknown firms battles to recover from multi-billion-dollar losses at its US nuclear operations.

It could also face the humiliating prospect of being delisted from Japan’s stock exchange if the sale does not raise the sufficient funds.

The move to sell represents something of a fall from grace for Toshiba, which can trace its history back as far as 1875 when the company set up a telegraph factory in the now swanky area of Ginza in Tokyo.

In the 1930s, the firm manufactured the first Japanese vacuum cleaner, the first fridge and the first washing machine, which still works today — albeit with an almighty racket.

It has been involved in the manufacture of an astonishing array of items from tiny electronic chips to nuclear reactors, with everything from televisions, computers and highway toll gates in between.

But Toshiba is not the only once-mighty Japanese conglomerate to feel the pain from ferocious foreign competition.

Household names Panasonic and NEC have been forced into major restructuring, and Sharp was acquired by Foxconn.

Toshiba’s problems stem in large part from what Yasuyuki Onishi, a specialist in the sector, described as its “reckless” purchase of US nuclear unit Westinghouse, which racked up billions of dollars in losses before being placed in bankruptcy protection.