Mita Copystar America expects little impact from parent company woes

Office World News, Sep 1998

Mita Copystar America, the U.S. subsidiary of Mita Industrial Co. Ltd., expects little immediate impact on its activities as its parent company undergoes reorganization in Taan.

Osaka-based Mita Industrial, along with five of its Japanese affiliates, has sought bankruptcy protection from creditors by filing in early August for the Japanese equivalent of a Chapter 11. While Japan's recession has caused a recent series of corporate failures, most bankruptcies have involved general contractors, financial firms and makers of raw materials. Mita Industrial's announcement indicates that Japan's economic slump is now impacting the manufacturers of processed products and raises concerns about the solvency of Japan's mighty manufacturing sector.

Confidence is low in Japan's ability to support its currency or to resuscitate its economy, and Mita Industrial's announcement of reorganization has further fueled active sales of the already weak yen.

Japan's Prime Minister Keizo Obuchi acknowledged that Japan's economy, the second-largest in the world, is in a prolonged slump. "The economic slump is lingering and we are in a severe situation," he stated at an August 10, 1998 parliamentary session, promising to do his utmost to pull Japan out of this crisis through tax cuts and budgetary spending. His prepared responses to Parliament's questioning, however, were viewed as merely reiterated promises, and confidence in Japan's banking system and in Japanese authorities continues to falter.

In the early 1990s, the Japanese yen was strong, which encouraged aggressive overseas expansions among many Japanese corporations, including Mita Industrial.

Mita president Yoshiro Mita told a news conference that the firm's business had been hurt by the yen's former strength, which had prompted Mita to shift production primarily to Hong Kong.

The yen's recent weakening, combined with falling office equipment prices in the midst of Japan's economic slump, has hurt Mita Industrial. Established in Osaka in 1948, the fifty-year-old company has current liabilities of more than 200 billion yen-or $1.36 billion.

Mita Industrial said that 65 percent of its overall sales come from overseas. It currently has a 3.5 percent market share in copier equipment in Japan, a 10.1 percent market share in the U.S. and a 7.7 percent market share in Europe.

Mita Industrial and its five affiliates plan to continue production and sales operations in Japan and overseas.

The planned reorganization of Mita Industrial looks optimistic if the Japanese courts rule in favor of the company's petition for creditor protection. Kyocera, a Kyoto-based company and the world's largest manufacturer of semiconductor components, is prepared to act as a sponsoring company for Mita Industrial. "Although we must wait for the district court's ruling to start Mita's rehabilitation process," said a Kyocera spokesperson, "we are prepared to dispatch an administrator."

Kyocera, which has forged an original equipment manufacturer contract with Mita, is currently considering a possible infusion of capital into Mita, according to a news release by Mita Copystar America. The Fairfield, NJ-based Mita Copystar said that production in Japan and all U.S. sales, marketing and logistics activities will continue as usual and that all normal business policies and processes will remain in effect. There are no current plans to curtail operations in the U.S. as a result of Mita Industrial's reorganization.

Mita Copystar is the sales and marketing arm of Mita Industrial and is responsible for operations, technical support, service, training, sales and distribution of high performance Mita copiers, fax, laser printers and digital products throughout the U.S., Canada, Mexico, South America and the Caribbean.

Akihuro Nasu, president of Mita Copystar America, stated, "We anticipate that Mita's reorganization will proceed smoothly and that our operations in the U.S. will be minimally affected."