The logo of Toshiba Corp. is seen at the company’s facility in Kawasaki, Kanagawa Prefecture, on Monday
Toshiba’s woes weigh heavily on government’s ambition to sell Japan’s nuclear technology
OSAKA – Toshiba’s announcement that it will write down nearly ¥712.5 billion in losses involving its U.S. nuclear unit, Westinghouse, is seen as a major setback for the government’s strategy of selling Japanese nuclear power technology abroad.
Over the past four years, Prime Minister Shinzo Abe, the Ministry of Economy, Trade, and Industry, and nuclear power players, such as Toshiba/Westinghouse, General Electric-Hitachi and Mitsubishi Heavy Industries, have promoted Japanese nuclear reactor technology worldwide.
Attempts to increase exports came even as concern within Japan grew over nuclear safety following a triple meltdown at the Fukushima No. 1 plant in the wake of the March 11, 2011 earthquake and tsunami. The efforts also came as questions were being raised about the total cost of nuclear power compared with other energy sources.
Japanese firms have attempted, with little success, to sell their technologies in countries as diverse as France, Vietnam, India, Turkey, Hungary, Poland, Slovakia, the Czech Republic and the United Arab Emirates. In June 2016, Toshiba said its goal was to win orders for 45 or more nuclear reactors overseas by 2030.
But Tuesday’s announcement by Toshiba came a few weeks after the company announced it would not take any new construction orders for nuclear reactors, and that it would focus instead on maintenance and decommissioning operations.
That decision effectively ended a decade-long effort by Toshiba, which began when it acquired a majority stake in Westinghouse in 2006, to make nuclear reactors a viable export business.
It follows greater than projected construction costs for four Westinghouse AP1000 next-generation nuclear reactors in the U.S. that have run billions of dollars over budget and are three years behind schedule. Original plans called for their startup around 2019 but that could be delayed.
Yoshimitsu Kobayashi, chairman of the Japan Association of Corporate Executives, told reporters at a regular news conference on Tuesday that promoting nuclear reactor exports was a necessary strategy, but one that needed to be reviewed.
“The nuclear power industry requires huge amounts of money for safety,” Kobayashi said.
“Given such high costs, we have to think about whether just one company can succeed. We have to keep strong technology in Japan, but we need to rethink how to create a union of private firms” in the nuclear business, he said.
But with Toshiba’s problems and the growing use worldwide of other, cheaper energy sources, including some renewables, anti-nuclear groups see an opportunity for Japan to change its basic policy.
“The Japanese government’s nuclear export policy was built on a combination of a poor understanding of the global energy market and self-delusion, said Shaun Burnie, a senior nuclear specialist at Greenpeace Germany who is currently based in Japan.
“The sooner the government and industry realize there is no future for nuclear power either domestically or in exports, the sooner they can concentrate on the energy technology of the future — renewables.”
VOX POPULI: Toshiba’s plight shows nuclear business is now a treacherous bet
What appears to be a lump of melted nuclear fuel is discernible in a photo, released late last month, of the interior of the crippled No. 2 reactor at the Fukushima No. 1 nuclear power plant.
The high radiation level inside the reactor would be lethal to humans so a small robot was expected to start inspecting the interior on Feb. 16. (The robot started inspection around 7:50 a.m.)
The robot is marked with the name TOSHIBA.
While leading the nation in the dismantling of nuclear reactors, Toshiba Corp. has aggressively pursued nuclear power plant construction overseas through its U.S. affiliate.
But on Feb. 14, the company announced a projected loss of 712.5 billion yen ($6.3 billion) in its nuclear business. To survive, Toshiba will have to sell off its profitable businesses piecemeal. To be sure, the company is in for massive restructuring.
The 2011 nuclear accident at the Fukushima plant was one of the indirect causes of Toshiba’s losses. Around the world, tighter regulations have been applied to nuclear power plants because of safety concerns, and Toshiba’s four nuclear plant construction projects in the United States became far more costly than anticipated.
The company has only itself to blame for underestimating the consequences of the Fukushima disaster.
I dropped in at the Toshiba Science Museum in Kawasaki, Kanagawa Prefecture, the other day. Its impressive array of exhibits included Japan’s first electric refrigerator, washing machine and vacuum cleaner. There was even a portable personal computer, said to be the first of its kind in the world.
Once a prestigious corporation that boasted cutting-edge technology, I wonder how long Toshiba’s decline will continue.
Overseas, Siemens AG of Germany withdrew from the nuclear business after the Fukushima accident, and France’s Areva SA is said to be struggling.
Toshiba’s massive losses remind us anew that the end is drawing near on the era of lucrative nuclear businesses.
A long, tough road lies ahead for the decommissioning of Fukushima’s nuclear reactors. I feel for Toshiba workers who are engaged in this task while their company languishes.
It will soon be six years since the Fukushima disaster. The days of having to confront the gravity of that accident are far from over.
Toshiba Corporation (aka Westinghouse) is withdrawing from the nuclear power construction business… Captains of Toshiba and Westinghouse are abandoning their nuclear Titanic sunk on economic iceberg!!!!!
Toshiba Corp. will cease taking orders related to the building of nuclear power stations, sources said Saturday, in a move that would effectively mark its withdrawal from the nuclear plant construction business.
The news comes amid reports Toshiba’s chairman may resign over the massive write-down that has doomed the company’s U.S. nuclear business.
The multinational conglomerate said Friday it will review its nuclear operations and spin off its chip business to raise funds in a bid to cover an expected asset impairment loss of up to ¥700 billion ($6.08 billion).
After Toshiba ceases taking new orders, it will focus on maintenance and decommissioning operations, according to the sources.
The company will continue work on four nuclear plants under construction in the United States that are expected to be completed by 2020.
The Japanese industrial conglomerate may announce company chairman Shigenori Shiga’s resignation as soon as Feb. 14, when it reports its April-December financial results, the sources also said.
Shiga once served as president of the U.S. nuclear unit, Westinghouse Electric Co., which Toshiba has said could face a multibillion-dollar loss due to cost overruns from delays in plant projects.
The post of Toshiba chairman is expected to remain vacant after Shiga’s resignation.
Westinghouse Chairman Danny Roderick is also set to step down, the sources said, but Toshiba President Satoshi Tsunakawa is likely to stay on.
Shiga, Roderick and Tsunakawa took their current posts last June as Toshiba reshuffled its management following an accounting scandal that surfaced in 2015.
Shiga was the vice president in charge of the power systems business when Westinghouse acquired CB&I Stone & Webster in late 2015. CB&I Stone & Webster is the U.S. nuclear plant construction firm at the heart of Toshiba’s massive write-down problem.
Toshiba to sell part of chip business, puts overseas nuclear ops under review
Toshiba Corp (6502.T) said it will sell a minority stake in its memory chip business as it urgently seeks funds to offset an imminent multi-billion dollar writedown, adding that its overseas nuclear division – the cause of its woes – was now under review.
The drastic measures are set to be just some of the tough choices the Japanese conglomerate will have to take as proceeds from the sale are likely to only cover part of a charge that domestic media has put at $6 billion.
Still battered by a 2015 accounting scandal, Toshiba was plunged back into crisis when it emerged late last year that it had to account for huge cost overruns at a U.S. power plant construction business recently acquired by its Westinghouse division.
Describing the nuclear division as no longer a central business focus for the firm, Chief Executive Satoshi Tsunakawa said Toshiba will review Westinghouse’s role in new projects and whether it will embark on new power plant construction. The division will also now fall under direct CEO supervision.
Tsunakawa added Toshiba was looking to sell less than 20 percent of its memory chip business – the world’s biggest NAND flash memory producer after Samsung Electronics (005930.KS) – which comprises the bulk of the conglomerate’s operating profit.
The firm is rushing to complete the sale by the end of the financial year in March as failure to do so will likely mean that shareholder equity – just $3 billion in the wake of the accounting scandal – would be wiped out by the charge.
Sources have said Toshiba aims to raise more than 200 billion yen ($1.7 billion) from the sale and potential investors include private equity firms, business partner Western Digital Corp (WDC.O) and the government-backed Development Bank of Japan.
It is also selling other assets although it ruled out the sales of any of its infrastructure businesses – which include water treatment, railway and elevator firms.
“We’ve been raising funds through sales of stock holdings, real estate and other assets,” Tsunakawa told a news conference without disclosing the amount, adding that various measures were being considered to boost the firm’s capital base by March.
Toshiba also said it may eventually list the memory chip business.
METI proposed that TEPCO would start a subsidiary to manage all its nuclear plants. Saying it would facilitate restarting the reactors at the Kashiwazaki Kariwa NPP, as since the beginning of the Tepco-owned Fukushima Daiichi nuclear plant disaster the government planned to use profits from the Tepco-owned Kashiwazaki-Kariwa NPP to finance the Fukushima Daiichi disaster costs; and that it would also encourage collaboration among other utilities nuclear power plants, and make merger or sale easier. METI thinks such change would also encourage the public to support nuclear reactors restarting.
As the total decommissionning costs could double, Tepco would also like the rules to be changed so as not take an added large loss on their books.
One day later Hitachi announced that they consider merging their nuclear business with Toshiba and Mistubishi.
These recent new developments show Japan nuclear industry on the defensive, former PM Koizumi warned the Liberal Democratic Party could lose the next election if it focuses on the nuclear power issue.
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