Report on “Fact-Finding Survey of the Japanese Nuclear Industry 2016” (for Fiscal Year 2016 (ended March 2017)) (Overview)

This latest survey was conducted for fiscal 2016, during which three nuclear power plants (NPPs) were in operation, to ascertain prevailing circumstances for the industry engaged in nuclear power.

The main items in the quantitative portion of the survey are nuclear-related expenditures by power companies, nuclear-related sales and backlogs of orders in mining and manufacturing firms, and nuclear-related employees in electric power companies and mining and manufacturing firms.

In the qualitative portion (questionnaire), business sentiment in industries engaged with nuclear power generation and the effects of shutdowns of NPPs are investigated. A question on deregulation of the retail power market from April 2016 was also included in this survey, for an understanding of the effects on the power-generating industry.

 

■ Method

• Target: A total of 393 for-profit companies, including JAIF’s member companies, engaged in the nuclear power field, were surveyed. There were valid responses from 253 companies (11 electric power utilities^[1]Electric power utilities with nuclear power plants., 232 mining and manufacturing firms^[2]Of for-profit companies related to nuclear businesses, a wide range of manufacturers of heavy electrical machinery and companies in the construction, nuclear fuel, and service industries, are … Continue reading, and 10 trading firms).
• Period covered: FY16 (April 2016 – March 2017)
• Survey conducted: June 1 to July 14, 2017
• Survey method: Distribution and return of questionnaires

 

■ Summary of Survey Results

1. Circumstances in FY16

Although the environment for nuclear-power and related industries, which had worsened after the March 2011 accident at the Fukushima Daiichi Nuclear Power Plants, showed signs of improving – new regulatory standards being met; some nuclear power plants (NPPs) restarted – expenditures by electric power utilities and sales by mining and manufacturing firms decreased slightly during FY16. The number of nuclear-related workers increased slightly in the electric power industry but declined in mining and manufacturing, for a net overall reduction.

2. Industrial trends seen in questionnaire responses

Most survey respondents described their business sentiment in FY17 as “bad,” and, in comparing sales with those in FY15, most responded that they were “unchanged” or “reduced.” Some foresaw the same situation as in FY17 prevailing in yet another year’s time, with similar effects on business sentiment and expected sales. In terms of effects of the shutdowns of NPPs, many respondents continued to point to reduced sales and difficulties in maintaining and continuing their technological capabilities. Those choosing the latter answer – maintaining and continuing their technological capabilities – have increased.

The number of respondents pointing to “consistent promotion of nuclear policy by the government,” “early restarting of NPPs and their stable operation” and “restoration of confidence of the people in nuclear generation” as factors necessary to successfully promote the nuclear power industry has been increasing for the past several years. Given that the number of respondents concerned about “restoration of confidence of the people in nuclear generation” and “ensuring and fostering of nuclear-related human resources” has increased, it can be deemed that fears are growing in circumstances where restarting NPPs is not making much progress.

3. Future course of action for the nuclear power industry

The economic scale of the industry remains large and the significance of the employment it provides remains high. The number of locally hired workers accounted for nearly 50% of total workers in the industry, so their importance to local economies is not insignificant. Meanwhile, in circumstances where restarting NPPs is not making much progress, there is concern about adverse effects on maintaining and continuing technological capabilities and maintaining employment. In order to sustain nuclear power generation as a key base-load power source ensuring Japan’s energy into the future, a steady nuclear policy should be carried out to support an investment environment for companies.

 

■ Quantitative Survey

<Main Survey Items>

1. Nuclear-related expenditures, sales and backlogs of orders

Nuclear-related expenditures by the electric power utilities decreased^[3]Calculations in this report are based on corrections issued by multiple companies subject to the survey to their nuclear related expenditures for FY15. to JPY1,869.5 billion (USD16.7 billion at USD1 = JPY112) in FY16, down JPY20.6 billion (USD0.2 billion), or 1%, from the previous year. Sales by mining and manufacturing firms totaled JPY1,730.8 billion (USD15.5 billion), down JPY111.6 billion (USD1.0 billion), or 6%, while order backlogs for mining and manufacturing firms increased to JPY1,998.8 billion (USD17.8 billion), up JPY174 billion (USD1.6 billion), or 10%. (Fig. A)

 

 

 

 

 

 

2. Nuclear-related workers

A total of 12,979 people worked at Japan’s electric power utilities, an increase of 328 people from the previous year, and 34,499 people were employed at mining and manufacturing firms, down by 1,615. The combined total was 47,478 workers, down 1,287, or 3%, from the previous year. (Fig. B)

 

 

 

 

 

 

The combined total of all workers locally hired by electric power utilities and mining and manufacturing firms in nuclear siting areas was 22,758, down 468 from the previous year, accounting for 48% of all nuclear-related workers, almost the same percentage as in the previous year. (Fig. C)

 

 

 

 

 

<Electric Power Utilities>

1. Nuclear-related expenditures were JPY1,869.5 billion

Nuclear-related expenditures in FY16 declined^[4]Calculations in this report are based on corrections issued by multiple companies subject to the survey to their nuclear related expenditures for FY15. to JPY1,869.5 billion (USD16.7 billion), down JPY20.6 billion (USD0.2 billion), or 1%, from FY15, accounting for 15% of power utilities’ total expenditures (operating expenses) of JPY12,235.1 billion (USD109.2 billion). Total expenditures by the utilities in FY16 decreased^[5]Total expenditures were substantially reduced as a result of a split-up of one of the companies subject to the survey. from JPY17,346.5 billion (USD154.9 billion) in FY15 to JPY12,235.1 billion (USD109.2 billion), down by JPY5,111.4 billion (USD45.6 billion), or 29% (Fig. D).

 

 

 

 

Among changes to major items in nuclear-related expenditures, capital investment in equipment and facilities declined to JPY372.9 billion (USD3.3 billion), down JPY120.7 billion (USD1.1 billion), accounting for 20% of the total expenditures. Land, buildings and structures expenses increased to JPY217.3 billion (USD1.9 billion), up JPY77.2 billion (USD0.7 billion), accounting for 12% of the total expenditures, and those related to operation, maintenance and repair increased to JPY308.6 billion (USD2.8 billion), up JPY55.7 billion (USD0.5 billion), accounting for 17% of the total. (Fig. E)^[6]Calculations in this report are based on corrections issued by multiple companies subject to the survey to their fuel and materials expenditures for FY15.^[7]Included in “Other” are compensation expenses, rental expenses, insurance premiums, taxes, comsumable supplies and interest..

 

 

 

 

 

 

 

2. JPY367.5 billion spent to meet new regulatory requirements

Total expenditures by power utilities on measures to meet the new governmental regulatory standards were JPY367.5 billion (USD3.3 billion) in FY16, accounting for 20% of the total nuclear-related expenditures of those companies. (Fig. F)

 

 

 

 

 

 

Total expenditures from FY11 through FY16 on measures to comply with the new governmental regulatory standards were JPY2,224.4 billion (USD19.9 billion), accounting for 22% of nuclear-related expenditures from FY11 through FY16. (Fig. G)

 

 

 

 

 

 

 

<Mining and Manufacturing Firms>

1. Nuclear-related sales were JPY1,730.8 billion

Nuclear-related sales by mining and manufacturing firms during FY16 reached JPY1,730.8 billion (USD15.5 billion). In terms of changes by customer, sales to electric power utilities declined to JPY1,367 billion (USD12.2 billion), down JPY85.7 billion (USD0.8 billion), accounting for 79% of the total sales, while those to overseas customers were JPY56.9 billion (USD0.5 billion), down JPY11.8 billion (USD0.1 billion) (3% of total sales). (Fig. H)

 

 

 

 

Broken down by the nature of the structure, decreases were seen for existing plants, at JPY826.7 billion (USD7.4 billion), down JPY63.7 billion (USD0.6 billion) (48% of total sales), for construction of new plants, at JPY100.9 billion (USD0.9 billion), down JPY26.7 billion (USD0.2 billion) (6% of total sales), and also for decommissioning, at JPY 187.5 billion (USD1.7 billion), down JPY22.1 billion (USD0.2 billion) (11% of total sales). (Fig. I)^[8]Calculations in this report are based on corrections issued by multiple companies subject to the survey to their sales related to existing plants reported for FY15.

 

 

 

 

 

Broken down by category of business, construction sales rose to JPY532.7 billion (USD4.8 billion), up JPY19.1 billion (USD0.2 billion) (31% of total sales), while those of precision instruments, electrical equipment and machinery, which had increased substantially in the previous fiscal year, declined by JPY91.1 billion (USD0.8 billion) to JPY585.9 billion (USD5.2 billion) (34% of total sales). (Fig. J)

 

 

 

 

 

 

Broken down by type of business (within the nuclear industry), approximately 80% of all nuclear-related sales were accounted for by four items: 28% by reactor manufacturers (JPY491.2 billion, or USD4.4 billion); 18% by nuclear fuel related companies (JPY316.8 billion, or USD2.8 billion); 17% by construction companies (JPY288.3 billion, or USD2.6 billion), and 15% by maintenance companies (JPY258.2 billion, or USD2.3 billion). (Fig. K and Fig. L)

 

■ Qualitative Survey (Questionnaire)

(Note) The questionnaire survey primarily reflected the current fiscal year (FY17), when it was conducted. Responses to the survey were not the official views of the respondent companies, but are recognized to be the thoughts of those who answered the questions.

<Business Sentiment in Japan’s Nuclear Power Industry>

An overwhelming 79% of respondents expressed negative business sentiment during FY17. (Fig. M)

 

 

 

 

 

 

Those expecting the situation to become worse in one year’s time (FY18) declined; and those saying the situation would remain unchanged grew. (Fig. N)

 

 

 

 

 

 

In year on year comparisons with FY16, respondents in FY17 who answered that their sales had decreased – the overwhelming effect since the Fukushima Daiichi accident – fell to 35%, but those who answered that sales had increased (26% in the FY16 survey) stood at 23%, down three points. (Fig. O)

 

 

 

 

 

 

Respondents expecting that sales in one year’s time (FY18) would increase from those in FY17 dropped to 18%, down two points. (Fig. P)

 

 

 

 

 

 

 

<Adverse Effects of the Nationwide NPP Shutdowns>

Regarding the adverse effects of Japan’s current suspension of NPP operations, over 50% of the respondents pointed to reduced sales and difficulties in maintaining and continuing their technological capabilities, but those citing reduced sales decreased, while the percentage of those choosing the latter (i.e., difficulties in maintaining and continuing) increased. (Fig. Q)

 

 

 

 

 

 

As for the extent of sales declines, a slight increase was seen in respondents saying their sales were reduced by more than 80%, while those saying the decline was over 20% fell to 48% on the whole. (Fig. R)

 

 

 

 

Regarding specific adverse effects in maintaining and continuing their technological capabilities, most respondents answered difficulties in carrying out OJT(技術伝承). (Fig. S)

 

 

 

 

 

Regarding effects on employment and business contraction, most cited the need to shift staff to other sections. (Fig. T)

 

 

 

 

 

 

<Expectations for the Government and Electric Power Utilities>

Regarding expectations for the government and the power utilities, the percentage of survey respondents saying they hoped for political support for financial aspects declined, while the percentage wanting support related to improvement of technological capabilities increased. (Fig. U)

 

 

 

 

 

 

 

 

<Effects of Deregulation of the Retail Power Market>

As for the effects of deregulation of the retail power market on nuclear-related industries hereafter, 41% of the respondents, down 2 points from the previous survey, said they expected no change, but 26%, up 1 point, said they expected business contraction. (Fig. V)

 

 

 

 

In terms of effects on nuclear-related sales, 27% of the respondents, down 6 points, said they didn’t know, while another 27%, up 4 points, said there might be reduced sales. The percentage answering that there might be expanded sales was 4%, up 2 points. (Fig. W)

 

 

 

 

 

<Issues for the Nuclear Power Industry>

As for the factors necessary to successfully promote the nuclear power industry, the greatest portion of respondents, 72%, selected consistent promotion of nuclear policy by the government, followed by early restarts of NPPs and stable NPP operation, and the restoration of public confidence in nuclear power. The respondents who pointed to the restoration of public confidence in nuclear power, and securing and fostering nuclear-related human resources, both increased by 6 points from the previous year. (Fig. X)