Chapter 3 : Overcoming a Financial Crisis : Japan’s First Commercially Produced TV 1950 1958 Chapter 3 1950 1958 In addition, black-market traders who paid no excise tax Under the reorganization plan, retirees received a discharge were flourishing, and this added to the turmoil in the allowance as stipulated by law, severance pay of two months’ market. The situation grew dire, with radio production in the salary, and a compensatory gift such as a commemorative industry plummeting from 800,000 sets in 1948, to 600,000 radio. As well as assisting employees who chose to seek new in 1949, and less than 300,000 units in 1950. Bankruptcies jobs, the company promised them preferential status when the slashed the number of radio manufacturers from 80 time came once more for the company to take on new Overcoming a Financial Crisis immediately after the war to just 17 companies. employees. The layoffs that the company was forced to make at that time were a painful episode for everyone involved. Japan’sJapan s First Commercially Produced TVT Desperate Efforts to Keep the Company Afloat Business Recovery Thanks to The company was saddled with a mountain of inventory and was posting losses due to wholesalers failing to pay Growing Demand for Radios Sharp developed the first TV produced in Japan, and in 1953, their bills. Cash flow was tight as well. Under these quickly moved to mass-produce sets before the start of television broadcasting. circumstances, on the dates when the company’s own bills Military Procurement for the Korean War The company’s foresight in launching research on TVs in 1931 were due, individual sales employees around the country Sparks a Boom scrambled to collect the proceeds from sales, which were —just as radio was beginning to gain in popularity—was finally bearing fruit. In June 1950, the Korean War broke out. Military The Sharp TV was born as the company overcame a crisis of survival resulting then remitted to the head office as quickly as possible in amounts of 20,000 yen or even 10,000 yen at a time. It was procurement for the war saved Japanese industry, which had from post-war turmoil and recession. a desperate effort to stave off bankruptcy. been struggling in a recession. The economy turned around and sales of goods boomed. In the radio market, customers’ The company played a central role in popularizing television At the end of February 1950, salary payments were delayed. In April, the company took a number of measures, desire to hear shortwave broadcasts telling of the growing and aimed to bring TVs to every home. such as strengthening its sales organization, lowering selling international tensions fueled demand for All-Wave It also added a variety of electrical products to its lineup prices, and introducing a low-priced superheterodyne radio. multi-band radios. that brought greater convenience to housework. In addition, production was suspended to concentrate on Net income The company boldly expanded with the aim of becoming a comprehensive selling existing inventory. However, during the period from for the fiscal period ending consumer electronics manufacturer. April to June, average monthly sales dropped to 15 million yen—40% of the figure for the equivalent period in the March 31, preceding year. By the end of July, borrowings amounted to 1951—at the TV sets and components in 1953 132 million yen. The company was also paying a special time, fiscal war indemnity tax, and there was insufficient cash on hand periods were six to cover these payments. months long— US soldiers prepare for an amphibious was 3.43 million landing during the Korean War (1950) (photo courtesy of Asahi Shimbun yen, with the Overcoming the Crisis with Tremendous newspaper) From a Crisis of Survival to a Financial Turnaround company 1 Cooperation and Support returning to profitability for the first time in over three Banks made reducing excess personnel a prerequisite for periods. That April, there was a large order for radios from granting additional loans: “You should cut 210 people, and the US government. This helped to boost net income for the commercial radio stations were scheduled to begin make it an organization of 378 people, which should be able to period ending in September by more than four times, to Handling a Steep Drop in Demand broadcasting the following year on new frequencies maintain current sales levels. And you should make further 13.29 million yen. for Radios different from those used by Japan Broadcasting management efforts.” President Hayakawa, however, had other Nevertheless, the company saw the boom as temporary Corporation (NHK). The industry suffered another blow ideas: “It would be better to dissolve the company than lay off and implemented a series of prudent management measures when consumers were reluctant to buy Kokumin-gata radios so many employees.” He gathered all the employees together in preparation for any sudden future recession. These Tight Fiscal Measures Bring About a Recession designed to receive NHK stations. Rumors circulated that and conveyed his thoughts to them. The employees responded measures helped the company withstand the impact of the That Hits the Company Hard these conventional radios would be susceptible to by shouting, “Don’t kill the company!” national recession that followed the cessation of US In the years after the war, Japan experienced severe interference from the new commercial stations. Instead, At a labor council meeting on August 9, 1950, the company procurements for the Korean War. inflation as a result of serious shortages of food and consumers were choosing to wait for newer announced a reorganization plan that included staff reductions. materials coupled with increased government spending superheterodyne models that had better channel selectivity. Many union members also had strong hopes for the survival of intended to spur economic recovery. Between the fall of the company and agreed to solicit members willing to take Commercial Radio Boom Boosts Popularity of 1945 and the spring of 1949, the consumer price index saw (Thousands voluntary early retirement. A pamphlet entitled, About Ways “Super Radios” of units) Production volumes in the Japanese radio industry an almost 100-fold increase (based on official prices). 250 for the Company to Get Back on Nine private commercial radio stations began To counter this situation, in 1949 and 1950 the General Other Its Feet, was distributed by the broadcasting in 1951, with that number swelling to 21 the Headquarters of the Allied Forces (GHQ) implemented a Superheterodyne company to all employees, following year. The resultant variety of programming on 200 Kokumin-gata models series of financial and monetary austerity measures that outlining the actual condition of offer sparked a boom in consumer demand for radios, which included an anti-inflation policy (the so-called “Dodge the business, including sales, in turn led to a rapid recovery in radio manufacturing. 150 Line”). The main recommendations of the initiative were to profits, and debt, as well as a The new Sharp 5R-50 Superheterodyne Radio introduced balance the national budget and reduce subsidies from the strategy for reorganization. in July 1950 was a compact, mass-produced model. It government. As a result, funds available to the open market 100 Within a month, the number of offered enough selectivity to prevent interference among were dramatically reduced. While this brought inflation employees taking early multiple broadcast signals from stations in urban areas, under control and stabilized prices, rapid deflation took hold 50 retirement reached the target set. along with the high sensitivity needed for receiving urban Furthermore, on top of the and the country fell into a deep recession. Unemployment 0 commercial broadcasts in rural areas. Sold at an affordable soared, and consumer purchasing power began to decline. 1947 1948 1949 1950 personal guarantees of all the 1234123412341234 price point, it became a popular product. After the war, the radio manufacturing industry had executives, the company Year/quarter A pamphlet entitled About Then there was the hit NHK radio drama, Kimi no na wa recovered relatively quickly and production capacity had Ways for the Company to received joint financing of 15 (“What’s Your Name?”). In 1952, the popularity of this risen. Yet sales became extremely sluggish due to the Although demand for low-price Kokumin-gata models had Get Back on Its Feet was million yen from four different program helped drive the number of radio subscribers recession, and inventories became bloated. Furthermore, begun to increase in the midst of the recession, it plummeted at distributed to all employees banks. the beginning of 1950 as consumers reined in their spending. (August 1950) beyond 10 million, marking a peak for the radio industry. 3-01 3-02 Chapter 3 : Overcoming a Financial Crisis : Japan’s First Commercially Produced TV 1950 1958 guidance of a single phrase from a scientific paper—“the The Dawn of the Television Era deflection coil is a cosine winding”—the company was 2 eventually able to perfect a winding machine that made mass production possible. Success in Developing a Prototype TV Signing a Technical Assistance Research on Television Began Even Before the War Agreement with US-Based RCA In December 1926, Kenjiro Takayanagi—an assistant The company completed a working prototype of the professor at Hamamatsu School of Technology, which is television. While it was a success in terms of receiving now Shizuoka University’s Faculty of Engineering— television signals, significant breakthroughs in TV successfully tested an experimental television based on technology had already been achieved in the US and technology that he had developed himself. Hearing of this, Europe. Moreover, bringing a practical television to market Hayakawa expressed his confidence that radio would be would require the cooperation of Western manufacturers superseded by the era of television.