Amid Chaos, Businesses Reopen in Kobe : Earthquake: Employees spend hours getting to work. Once there, they find it’s difficult to get anything done.

The city was still reeling from the devastating earthquake five days before. But on Sunday, hydraulic shovels were busily clearing rubble at Sumitomo Rubber’s Dunlop tire and golf ball factory.

Across the street, at the company’s headquarters, 500 employees--including some who had lost their homes to the quake--showed up for work after traveling hours on packed trains, walking or bicycling through the scorched and upturned city.

Here and there, stores and gasoline stations have begun opening up for business. And the sound of jackhammers demolishing buildings has begun to replace the shrill sirens of rescue vehicles, a sure sign that the recovery has finally started.

But it will be a long and tough beginning.

Some stores that opened for business Sunday morning had emptied their shelves by evening. Without delivery trucks to replenish supplies, many merchants said they would have to close down again in a day or two.

And although employees are showing up for work, many acknowledge that their efforts produce few results--and may, in fact, slow the recovery effort by unnecessarily adding traffic to key supply routes.

What the workers do accomplish requires almost superhuman effort.

Consider Sumitomo’s headquarters, a new white marble building that survived the earthquake to tower above a neighborhood in ruins. With power out, employees must walk up and down the building’s 14 flights of steps. Without water, the bathrooms are of limited use. Lunch is cooked at a Sumitomo factory hours away and delivered by truck each morning. There are no open stores or restaurants in walking distance.

Across the street at the rubber factory, there seems little hope that the plant will ever open again, despite all the bustle.

Here as everywhere in the region, there is the pervasive but unspoken sorrow that has cut deep scars in a corporate culture where employees regard one another as members of an extended family. The two receptionists at Sumitomo’s headquarters smile, but a large sheet of paper taped on the wall behind them lists the dozens of employees and their family members who are dead or missing.

The best efforts of these corporate soldiers who come out to work against all odds is negated by a simple reality. Last week’s earthquake broke the Japanese main island of Honshu in half, cutting off east-to-west supply routes that previously carried a quarter of the nation’s traffic.

Computer, steel, automobile and semiconductor factories throughout the region either have earthquake damage or are cut off from suppliers and basic water and power. Kobe, while now served by trains in a roundabout manner, is all but an island cut off from the rest of Japan.

The quake’s toll, nonetheless, reverberates across the Japanese economy--and beyond. Concern that Japan’s recovery will be impeded by the disaster (and that U.S. interest rates will rise further) had carved 1.7% off the Nikkei 225 average by early afternoon today, dropping the stock index to its level of a year ago.

The Bank of Japan, meanwhile, has poured money into the nation’s banking system to meet the surging demand for cash as companies and individuals start spending to repair damage.

That down-to-business spirit is on vivid display in Kobe.

At a Toyota dealership, service manager Moriji Tatsumo said he left home at 6 a.m. Sunday so that he could make it to work by opening time at 9. “I want to be here in case my customers need me,” Tatsumo said.

He has had three customers this morning. One customer’s car was crushed when his house collapsed.

At Shoko Chukin, a bank that serves small businesses, there is no power, but employees are operating out of an alley-side door, offering loans of up to $3,000. Satoru Maeda, a loan officer, said that within a couple of days after the earthquake, he and other bank employees were bicycling two to three hours each way to get to work--even though there were no customers to serve.

“You might not understand this in America,” Maeda says. “There isn’t much we can do, but we want to do our best anyway.”

With 300,000 people living in shelters and the rest of the city’s population of 1.4 million scrounging for such basic necessities as water and food, the minds of most residents have yet to turn to business.

“It’s too early to do business,” said Toshio Oyama, a worker at a distributor of toilet bowls and sinks, as he sweeps away piles broken ceramic. Orders are coming in from outlying areas that were not hit as hard by the quake. “In the city, people are still assessing the damage,” he said.

The decision by American consumer products giant Procter & Gamble to move its Japanese headquarters to Osaka rather than rebuild or relocate its damaged facilities in Kobe goes counter to this ethic of effort and perseverance; Kobe residents call it disloyal.

But P&G; isn’t the only firm that has given up on the idea of doing business in Kobe. Nissan Rent-a-Car offers free vehicles to customers who will drive them to drop-off points outside the city. “There is no demand for cars here,” said Yoji Maeda, a sales agent. With roads clogged, he said, “you can’t get around.”

But for the most part, the merchant ethic continues to drive entrepreneurs, in spite of the huge obstacles. This a region where the traditional greeting, “Have you made money today?” can still occasionally be heard.

But it is a merchant ethic with a conscience. There has been little price gouging.

“We don’t want to make money on this,” says a shopkeeper as he loads a propane tank onto a truck that will distribute the fuel free to relief centers at nearby schools.

Business in this area is like a living organism, and people attach sentiment to their production facilities, a factor that may aid in their recovery.

Sumitomo’s rubber factory is a descendant of Japan’s first rubber plant, built with technology licensed from Britain’s Dunlop; eventually, Sumitomo bought the British firm. With the area’s high land costs and the plant’s severe damage, the sensible decision might be to abandon it.

But Sumitomo representatives say they will do their utmost to save it.

“It’s a symbol of Kobe,” spokesman Masatoshi Hayashi says. The plant, which supplied motorcycles and also 60% of the nation’s golf balls before the earthquake, started out making Japan’s first rubber rickshaw tires.

“The workers are very attached to this factory,” Hayashi said.

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Status Report on Industries

Some factories in the Kobe region were to have resumed production today, but many continue to be shut down by earthquake damage, supply shortages or the absence of power and water. Some examples:

Matsushita Electric: Makes personal computers, word processors and other business machines at three area factories. Planned to reopen today.

Daihatsu Motors: Two of six factories closed because parts cannot be delivered by suppliers.

Kobe Steel: Steel mill closed by damage for another month.

Mitsubishi Electric: No forecast for reopening two major factories, including one that manufactures electric generators.

Kawasaki Heavy Industries: Damage to portions of its shipbuilding facilities. Hopes to resume production in portions of the plant.

Sumitomo Electric: Supplies brake parts for Toyota and others. Planned to resume operations today at 50% of capacity.

Sake industry: Brewers that make 30% of the nation’s rice wine supply were wiped out by fire.