Many Kobe Firms Still in a State of Aftershock : Asia: Some big companies have come back after the Jan. 17 quake, but many smaller ones are struggling.

Six months after the Kobe earthquake threw local businesses into turmoil, many small firms are still struggling, although some of Kobe’s largest companies quickly overcame their problems.

Norihisa Hamazume, owner of a scuba-diving shop and school and of a coffee shop, is typical of many Kobe store owners.

“We suffered a double blow. First there was the recession. Then there was the earthquake,” he said. “The coffee shop is doing all right, but nobody is interested in the diving.”

He said the future looks bleak, adding that the Japanese economy’s weakness in the past four years had already made business difficult and that the Jan. 17 earthquake, which killed 5,500 people, compounded that.

Hamazume said one of the main problems created by the quake was traffic on local roads, which were crammed while Kobe expressways were closed for repairs, making driving to his and other stores nearly impossible.

He said damage to local railways, which were fully reopened just late last month, also made business difficult for shopkeepers.

Masami Okuda, curator of the sake museum owned by sake maker Sawanotsuru, also lamented the damage to Kobe’s roads, railways and port, which have slashed the number of both foreign and Japanese visitors--a major source of revenue for the city’s businesses before the earthquake struck.

Kobe’s Economic Bureau said in a recent report that 380,000 people visited the city’s 14 key tourist spots during the 10-day annual Golden Week spring break, fewer than half the number of a year earlier.

Okuda said 70,000 people visited his museum in 1994. This year and next there will be no visitors.

Despite the lingering difficulties at many small- and medium-sized firms in Kobe, the city’s Chamber of Commerce found in a recent survey that of nearly 300 firms that left after the earthquake, 30% had returned, 20% planned to return by the end of the year and another 30% planned to return after that.

And this western Japanese port city’s flagship enterprise, Kobe Steel, which was forced to halt production for 10 weeks after the earthquake, has already weathered its storm, company officials have said.

“Recovery from the earthquake was smoother than we had thought,” said Masahiro Kumamoto, vice president at Kobe Steel.

The steelmaker was the company hardest hit by the earthquake, suffering $1.5 billion in lost business and damage to factories and equipment.

In the fiscal year that started in March, Kobe Steel expects to make “parent current profit” of $410 million against a loss of $221 million in the previous year.

Kobe Steel’s comeback was helped by the central government, which offered logistic support, and by competitors, who offered to lend it key machinery lost in the quake.

Hamazume said neither his competitors nor the government had helped him. But, he said, he did not need any direct help.

He warned that unless the central government speedily rebuilds the shattered infrastructure of Kobe, then its small businesses would stumble and fall, one after the other.

“The question is whether the current government has the spine to raise taxes or borrow enough money to pay for Kobe to be rebuilt,” Hamazume said.

“It’ll take three, five, even 10 years for Kobe’s small businesses to recover, depending on whether the government sticks to its promises,” he said. “If it doesn’t, the situation for Kobe’s small businesses is going to get a lot worse.”