Lessons for On-The-Spot Recovery:
Riken and the 2007 Chuetsu Offshore Earthquake

March 2020

Daniel Arturo Heller
Faculty of Business Administration
Graduate School of International Social Sciences
Yokohama National University, Yokohama, Japanhidanielheller@me.com

Discussion Paper (2019-CGES-01)
Center for Economic Growth Strategy
Yokohama National University

1. Introduction
When a production site faces severe disruption due to a natural or human-induced disaster, human lives
are put at risk. Protecting people working at a plant must be the primary focus of management whenever adisaster strikes. In the case of a disaster such as an earthquake where the surrounding community is also
severely disrupted, a firm must also do all it can to support the recovery of its local community. Yet
beyond these paramount concerns, a firm also has a moral and probably also a clear legal obligation to
make every reasonable effort to mitigate any hardship that a disrupted site imposes on its customers andsuppliers.
A firm that is faced with a sudden and severe disruption at its production site needs to restore theflow of finished goods as quickly as possible. This can be done by recovering production capacity at thedisrupted site (on-the-spot recovery), which should always be the default choice (as long as the disruption
was not caused by the site’s own egregious fault), in order to curb any possible opportunistic behavior
from industrial customers that would seek to take advantage of a disrupted firm’s plight. However, whennecessary, restoring the flow of finished goods may also be done by shifting production elsewhere(substitutive production), or some combination of on-the-spot recovery and substitutive production.
Whitney et al. (2014) speculates that after a severe disruption on-the-spot recovery will be morecommonly observed than substitutive production for most industrial products due to the high levels of
specialized production equipment found in most plants. Specialization means that production assets are
specifically created to manufacture a particular product or products and cannot easily be used for otherpurposes. The higher this asset specificity (provided it is necessary to meet product and not simply
production process specifications), the harder it will generally be to pursue a diversification strategy, suchas substitutive production. Thus, when there is such high asset specificity, it will be more likely that afirm will seek to pursue on-the-spot recovery, except in cases where the damage caused by the disaster iscatastrophic.
While research is needed to determine if, and if so the degree to which, on-the-spot recovery is infact more common than substitutive production, there are clearly many cases of on-the-spot recovery
documented in the literature (Sheffi 2005, Tomlin 2006, Tomlin and Wang 2010, Whitney et al. 2013).
Yet, at the same time, few detailed case studies of actual on-the-spot recoveries exist, which may be dueto the difficulty that researchers face in obtaining such data from companies that are often reluctant toshare their disaster experiences, especially where there is loss of life.
The lack of detailed real-world case studies of disaster recoveries is unfortunate because suchstudies can provide the practical guidance that companies need to minimize human, physical, andfinancial losses from disasters. The present paper seeks to address this deficiency in the literature bypresenting the 2007 Chuetsu Offshore earthquake recovery experience of Riken Corporation andanswering the following research question: What does the Riken Case tell us about the characteristics ofeffective management of on-the-spot recovery at a severely disrupted production site, and how can suchcharacteristics be reproduced at industrial sites in general?
The paper is organized as follows. First, we present the research methodology used to gather thecase study’s data, including some background information on Riken and its main product, piston rings.
Next, we outline the company’s pre-disaster preparations. Then, we describe the scale of the disruptionthat occurred after the 2007 earthquake, as well as the recovery effort and results. Finally, we analyze thecase to distill the lessons that it offers for on-the-spot recovery of production sites in general.
To summarize the paper’s findings, the first lesson that can be learned from the Riken case is therather obvious but all too often overlooked necessity for companies to take basic measures of disaster
preparedness, in order to minimize the risk to life and property. The second lesson relates to production
sites where the production equipment has high asset specificity. In such cases, it will be difficult to pursue
substitutive production after a severe disruption. If the supply chain also features low inventory levels of
the finished goods produced by the disrupted site, then rapid on-the-spot recovery will be an urgent
necessity. Recovery assistance teams sent to a disrupted site by external stakeholders, such as industrial

2

customers and suppliers, can speed up the recovery effort if there is a high level of trust between the
disrupted firm and such stakeholders.
Trust between Riken and its external stakeholders was built up over a long history of cooperativeinteraction. Sustained efforts over many years by Riken’s shop floor personnel and engineers to build
daily operational excellence in collaboration with the company’s automotive customers and suppliers
seem to have been a critical factor in enabling quick on-the-spot recovery of Riken’s production lines
following the 2007 earthquake.

2. Research Methodology
This paper probes how Riken’s piston ring manufacturing facilities recovered from the Chuetsu
Offshore Earthquake that struck in the Japan Sea near Niigata Prefecture on July 2007. Data collection
and case analysis follows Yin (1994), which recommends case-study research for studying acontemporary event in its real-life context when the boundary between the phenomenon and its context
are blurred. A key tool used in case-study research is triangulation from multiple sources of evidence. The
following data sources were used to research the Riken case.
The author took part in a five-year (2010-2014) research project on supply chain disruption andrecovery, with Daniel E. Whitney and Jianxi Luo, that collected data from primary and secondary sources
about the experience of Riken Corporation when its piston ring manufacturing facility was severely
disrupted by the 2007 earthquake. The findings of this research project are contained in Whitney et al.
(2013, 2014).
The author participated in three visits to Riken to collect the primary data used in the present
paper. The first visit on March 23, 2010 was to Riken’s Kashiwazaki Plant that was disrupted by the 2007
earthquake. The half-day visit began with an overview presentation, followed by a plant tour of some ofthe piston ring manufacturing facilities that were damaged by the earthquake in 2007, and ended with anextensive question and answer session with the head of production administration, who was personallyinvolved in the disruption recovery. After the visit, the author had several follow-up interactions with thismanager by email. Additionally, the author was given copies of Riken (2007a, 2007b), which together
with Yoshimura (2008) are the source of many of the case details presented here.
The author’s second visit to Riken was on July 13, 2012. This time the visit was to Riken’s
Kumagaya Plant, which is located 150 kilometers away from Kashiwazaki City, yet where a two-hourgroup interview specifically about the 2007 earthquake recovery was conducted with the following four
people, all of whom were directly involved in the disruption recovery: the plant manager, the head of the
precision manufacturing department, the head of production administration, and a senior engineer in the
product development division. A senior manager in quality control also participated in the discussion, but
he had joined Riken after 2007.
The author’s third visit to Riken was on April 20, 2015, also to the Kashiwazaki Plant, to have aplant tour and discussion together with a group of approximately 20 Japanese auto industry practitioners
and analysts who sought to learn lessons from Riken’s recovery experience. Finally, the author
participated in a visit to Toyota Motor Company on October 28, 2016, where the support that Toyota
provided to Riken in 2007 was discussed in detail.

2.1. Overview of Riken and Its Products
Riken Corporation started out as Rikagaku Kogyo, which was founded in 1927 to commercialize theoutput of the Institute of Physical and Chemical Research, a research laboratory of the national
government. The Rikagaku Kogyo Group (a zaibatsu) was broken up in 1949 after the end of World War
II into 11 independent companies, one of which was the company that would later change its name to
Riken Corporation.

3

Riken opened its Kashiwazaki Plant in Niigata Prefecture in 1932 as a piston ring manufacturing
facility that included equipment for casting metal. The company opened its Kumagaya Plant in 1939,
which at the time was also a plant dedicated to the manufacture of piston rings. In the post-WWII period,
Riken engaged in technical cooperation agreements with overseas companies in the 1950s and 1960s to
improve its precision casting techniques and refine its piston ring technology. From its beginnings, Riken
has intensively collaborated with its automotive customers and suppliers in Japan to perfect its productand production processes.
In 1983, Riken constructed a second plant in Kashiwazaki City, the Tsurugi Plant (about 1/3 thesize of the Kashiwazaki Plant and located 5 km away), to specialize in the manufacture of steel pistonrings. Riken’s R&D facilities for piston rings are located at the Tsurugi Plant. The two plants together
have buildings that cover approximately 102,000 sq. meters. In 2014, there were around 1,500 people(including non-regular personnel) employed by Riken at its two plants in Kashiwazaki City. In addition, 9companies that are Riken affiliates and around 40 of its suppliers are located within the Kashiwazaki City
limits.
On a consolidated basis, Riken employed approximately 4,000 people in Japan in 2014, withsales of 75 billion yen (approximately 715 million USD at the time), on which it earned current profit of
7.3 billion yen. Riken has long supplied around half of the piston rings used by Japanese automakers inJapan. The company sells to all Japanese and many overseas automakers. Riken also supplies piston rings
for use in motorcycles, construction machinery, aircrafts, ships, and seal rings for transmission
manufacturers.
Riken is best known as the largest developer and manufacturer of piston rings in Japan. Building
on its position as the leading Japanese piston ring manufacturer, Riken opened its first overseas joint
venture in Taiwan in 1968. International expansion was pursued by Riken opening joint ventures inThailand (1974), Indonesia (1974), India (1986 and 2014), the US (1989), and China (1990). Riken
opened its first fully owned overseas manufacturing subsidiary in China (Wuhan) in 2004. Its second
fully owned subsidiary was opened in Mexico in 2012. Some of these overseas plants supply products
other than piston rings.
In 2013, the average number of piston rings manufactured by Riken each month totaled 17
million in Japan and 23.5 million overseas. In addition to piston rings, Riken also develops andmanufactures cast metal parts (e.g., steering knuckles, differential cases, pressure plates, camshafts,
crankshaft sleeves) for industrial and automotive use, as well as precision components (e.g., vanes forcompressors, valve lifters). Although Riken produces camshafts and castings for automotive suspension
parts at its Kashiwazaki Plant, most of its domestic production of products other than piston and seal rings
is done at its Kumagaya Plant. Riken’s sales are dominated by its piston ring business and, in 2014, 83%of the company’s sales were automotive related.
Piston rings play a major role in determining the durability of an engine. The core competence ofpiston ring manufacturers is steel and aluminum coating capabilities to create the best seal with the least
amount of resistance. A better seal prevents oil from leaking into the piston chamber, which damages theengine and has a negative effect on fuel economy and exhaust emissions. On the other hand, a seal that is
too tight will make the engine work harder than necessary to produce power, thereby also lowering fueleconomy and potentially harming the durability of an engine. Improved coating of the rings is one way to
overcome this inherent trade-off.
Over the years, the so-called black-box parts development of piston rings has evolved, with
automakers increasingly asking for greater amounts of information on test results, characteristics ofmaterials, and so on. The already severe requirements on piston-ring manufacturing—due to high levelsof complexity caused by interdependencies between piston rings, pistons and cylinders—have multiplied
further as differing specifications are needed for different fuel types, putting an ever heavier burden on
piston ring manufacturers. When requested, Riken sends guest engineers to work inside the technicalcenters of some of its customers.
Riken has its own engine testing facility in Kashiwazaki City and employs many R&D personnel
performing product and process design. Riken works closely with the automakers and piston and cylinder

4

suppliers. In Japan, piston ring suppliers traditionally worked directly with the automakers as first-tiersuppliers. Recently, the purchasing of some Japanese automakers has started to align itself more with theglobal standard, where the piston ring manufacturer will only work with the automaker as a second-tiersupplier, that is, through a first-tier “system supplier”. Japanese piston ring manufacturers tend to prefer
to work directly with the automakers, so that they can receive information about the engine concept andits specifications from the engine designers and communicate closely with them.
When an all-new engine is developed, Riken works with the automaker directly (or through asystem supplier) from the initial decision on the engine concept to the end of the development project. It
is a process that generally takes around three years. The breakdown of this period is an initial intense
preparation phase, core development work, followed by a long verification phase, including many
endurance tests and presentations to the customer to get final approval for the piston rings to be
manufactured on specific production lines, which creates the high asset specificity of this product.
Changing production lines is only possible after the extensive verification process is fully repeated.
3. Riken’s Pre-Disaster Preparations
After an earthquake that occurred in Niigata in 2004, Riken performed an extensive analysis of theearthquake resiliency of its buildings in Kashiwazaki City. Based on the results of this study, various fireprevention measures were implemented and a plan was made to strengthen the building structures. Riken
had finished the principal component of the construction plan, namely installing pillars and crossbeams in
the center of the main building at the Kashiwazaki Plant, before the 2007 earthquake hit. Had it not been
for these reinforcements, this building could very well have collapsed.
A comprehensive back-up system for the company’s data systems was also implemented
following the 2004 earthquake, as well as strengthening of the building housing the IT servers. As aresult, Riken had up-to-date data as of the day before the 2007 earthquake. Moreover, after 2004, anemergency generator was also installed, which automatically turned on a newly installed emergency
lighting and PA system when the 2007 earthquake hit.
Another way in which Riken responded to the 2004 earthquake was by writing a business
continuity plan (BCP). Although the plan proved to be rather insufficient in various ways, it did help
Riken quickly establish two situation control rooms, one at the Kashiwazaki Plant and one at its Tokyo
headquarters, and make a fast start on checking the condition of all of its employees in the area. The BCP
plan also contained a list of the cell phone numbers of the presidents of all the companies that were
suppliers, customers, or other important partners of Riken’s facilities in Kashiwazaki City.

4. Earthquake Damage and Recovery at Riken
A major earthquake off the Western coast of Niigata Prefecture, Japan, which occurred at 10:13 in themorning on July 16, 2007 and which registered 6.6 magnitude on the Richter scale, was soon followed by
a 6.8 earthquake in the same area. Both of these quakes, but especially the latter, strongly shook Riken’s
facilities in Kashiwazaki City. It was a national holiday and few people were at the plant, with almost nolines operating at Riken or its affiliated companies in the city, which helps explain why there were no
fatalities at Riken, although 41 people who worked for Riken or its affiliated companies did suffer
earthquake-related injuries, 13 of whom required workers’ compensation. Riken’s piston ring
manufacturing lines, casting lines, and camshaft lines were all severely damaged.
Riken’s Kashiwazaki plants were the sole source of the piston rings used in many vehicles
assembled by Japanese automakers. The severe disruption of Riken’s production lines, coupled with the
low inventories held by Japanese automakers, quickly forced vehicle assembly plants to stop production,
which in turn led to the stoppage of many other auto parts suppliers in Japan. Newspaper, industry, andgovernment sources report that, between July 19 and 23 all automakers in Japan had to stop production at5least at some of their plants due to the disrupted supply of piston rings from Riken. Whitney et al. (2013)
report that some have estimated the Japanese auto industry’s losses from the earthquake at 100 billion yen(820 million USD at the time), with most of this related to delays in vehicle production due to thedisruption at Riken. Establishing substitutive production for highly asset-specific parts, like piston rings,
has a very long lead time, so on-the-spot recovery needed to be done as rapidly as possible.
All of the approximately 1,100 machines used by Riken to manufacture piston rings at its
Kashiwazaki Plant were affected in some way by the earthquake: 65% were shifted off their base, 18%
were titled, and 17% were knocked over completely. Riken also found that many of the plant’s 5,000 dies,gauges, and measurement tools had fallen off their racks. Furthermore, 7.6% of work-in-progress
inventory and 0.3% of finished goods inventory were damaged by the earthquake.
As for casting lines used to manufacture automotive suspension parts, one sand bin fell over andwas damaged, and one had its supports broken. Three sand bucket elevators were damaged, as were
dollies for transporting finished molds. The rack for holding finished molds also fell over, damaging 104
molds. For camshaft manufacturing, 98% of the approximately 120 machines were shifted off their base.
Since it became immediately clear that there was significant damage at its Kashiwazaki facilities, thecompany sent as many personnel as possible to the affected sites from its other domestic plants (including
affiliates) and Tokyo headquarters. Such personnel were sent to assist in the recovery efforts, including
filling in for Kashiwazaki personnel who needed to take care of their own families and local communities
that had been devastated by the earthquake.
Hundreds of relief personnel from Riken’s customers (automakers) and other companies (e.g.,equipment, parts and material suppliers) also came to assist in the recovery. The first groups began toarrive at Riken on July 17, the day immediately after the earthquake. At the peak, on July 23, whenvolume production was restarted, over 800 relief personnel from external stakeholders were at Riken’ssite supporting the recovery effort. They had to work around the clock to test and retest production lines
to ensure pre-earthquake quality levels. Between July 17 and August 11, the cumulative number of relief
personnel who participated in the recovery effort came to more than 7,900 people.
The recovery effort at Riken was greatly supported by the experience of automakers, notably
Toyota Motor Corporation, which used expertise gained from past earthquake-induced disruptions at
suppliers, such as after the Kobe earthquake in 1995, to identify what kind of help would be needed at thedisrupted site and in what sequence. The companies that sent personnel to support Riken’s recovery
efforts set up an On-Site Countermeasures Headquarters (genchi taisaku honbu) at the Kashiwazaki Plant,
where meetings were held three times a day, after which reports were sent back to each company withrequests for additional relief personnel and equipment.
On the two days immediately following the earthquake, July 17 and 18, the first wave of relief
personnel began to arrive from the automakers and other companies that sent recovery assistance teams.
These first responders were small advance teams to assist in surveying and assessing the damage. The
teams were voluntarily sent by companies that sought to support Riken, and Riken assigned each team anarea of concern, based on the experience of the people who had been sent. Riken’s personnel joined eachof the teams to work with them and guide them around the damaged facility, and some Riken workers
were assigned to liaise with each recovery assistance team. To facilitate everyone working smoothly
together and clarify roles and responsibilities, each of the people involved in the recovery efforts
displayed his name on his shirt and hat.
In Riken’s haste to check on the condition of its own employees and on the damage inflicted by
the earthquake on its facilities, the company did not contact its customers and suppliers until the eveningof the day of the earthquake (which had struck in the morning). Riken (2007a, 2007b) clearly states thatthe company regrets being slow in making initial contact with its customers and suppliers.
Following the earthquake and in parallel with its efforts to check on the condition of its employees,
managers were sent out in pairs to survey the damage inflicted on Riken’s equipment and buildings.
During this task, the managers had always to be careful to secure access to an escape route in case of alarge aftershock. In fact, there was only one large aftershock following the first earthquake, and having noother major aftershocks contributed to the speedy recovery described in this paper.

6

In reporting damage, mangers were instructed to clearly define the basis on which they carriedout their assessment. Their evaluations were double checked, and the results were used to begin work on arecovery timetable. The advance teams thoroughly assessed the damage, set the overall recovery policy,
estimated the amount of work required to solve each identified problem, and what personnel would beneeded. The advance teams also had to estimate the expected dates when the supply of water, natural gas,and electricity would be restored to the plant. Moreover, it was important to obtain timely information on
the state of the surrounding roads and bridges, which would be needed to bring people, equipment, andmaterials in and out of the disrupted sites.
Information and assessments were used to make recovery plans that were reported back to eachcompany that had sent recovery assistance teams. While these early reports and requests for additional
personnel were being sent, in those areas that were unlikely to be severely affected by any secondary
damage from aftershocks, some of the advanced teams also began to work on righting smaller equipmentthat had fallen over or was otherwise impacted by the earthquake.
The second wave of relief personnel who came after the advance teams were experts andoperators of heavy machinery—including TIR rollers, bars, jacks, and chain blocks which are used for
installing and moving large machines—who were tasked with tapping their daily experience to reset
equipment and ensure that production bases were smooth and level. The third wave was relief personnel
who possessed the skills and experience to fine-tune production machines to achieve the required level ofprecision, re-establish the flow of the work-in-progress through the production lines, and verify quality
assurance processes.
In some cases, rather than restoring production lines exactly to their pre-earthquake state,
opportunities were taken to improve their layout. Among its many words of appreciation for the recovery
assistance teams, Riken (2007a) contains a quote from a production manager who says that thecooperation of personnel from external stakeholders helped improve the production lines beyond what
they had been before the earthquake. Riken’s personnel and some of the external personnel on therecovery assistance teams were already quite familiar with each other and with the equipment in theplants, due to many years of experience working together. This familiarity helped them to make these
improvements and quickly set up a timeline for the recovery effort.
While heavy equipment experts reset the machines and made them operational again, personnel
from the recovery assistance teams and Riken set targets for reducing cycle times and raising theoperating efficiency of the equipment, which helped increase the speed at which lost production could berecovered after manufacturing was restarted. Such discussions were generally held not in a meeting room
but right at line side to speed up decision making.
Based on the initial assessment as to the expected date for restoring water supplies to the plant,
arrangements were made to truck in water for use in trial production and the rapid ramping up of large
volume production. In addition, a heavy-oil boiler was obtained as a temporary measure until natural gas
supply was restored. Arrangements such as these were made by relief personnel who were specialists in
production planning and administration. These specialists also coordinated recovery work on issues thatcrossed multiple buildings and areas. In parallel with these efforts, experts in logistics from both Riken
and external companies worked on resolving issues related to moving parts in and out of Riken and its
suppliers’ plants, as well as delivering finished goods to its customers’ plants.

4.1. Production Resumption Timeline and Organization
By July 20, four days after the quake, all of the damaged and fallen equipment had been righted. On July
23, the seventh day after the quake, volume production on most piston ring lines was restarted, with someof Riken’s customers also reportedly restarting production on this same day using the first batches ofpiston rings that came off the restored lines. July 23 was also the day that marked the peak number ofrelief personnel, 800 people, at Riken. By July 24, all but two piston ring lines were running. However,
only half of the production lines for cast automotive suspension parts could be restored by July 23. It took7

a full two weeks for production to be restored on the remaining piston ring lines and casting lines.
Nevertheless, two weeks was still well ahead of Riken’s initial estimate of more than one month. After
resuming production, some lines operated on three shifts instead of the normal two, which in some cases
continued until the end of September to make up for lost production.
For production to be resumed on the piston ring lines, 1,300 gauges had to be checked andrestored. On July 20, three days before the target date to restart production, it became clear that it would
not be possible to finish checking all of these gauges in time. So, Riken quickly decided to divide thegauges up and send them to be checked off-site by the companies that had sent personnel to help Riken
recover and then to have the gauges sent back to Riken. In this way, the job was completed in time.
Likewise, when it became clear that replacement shipments and repairs of damaged equipment used tomeasure material strength and ring circularity would not be ready in time, Riken asked the companies that
had sent recovery assistance teams to lend it such measurement equipment.
Once additional relief personnel arrived to join and sometimes replace the advance teams, the sizeof the recovery assistance teams grew to between 10 and 20 people. During the recovery period, progress
reports prepared by the recovery assistance teams were shared with Riken’s On-Site Recovery
Headquarters (Riken no genchi honbu) at two daily general meetings, one in the morning and one in theevening, that were attended by representatives from all companies involved in the recovery effort. Thesemeetings were important vehicles for information sharing. Moreover, to create an atmosphere of fairness,
Riken’s president decided that the post-recovery production schedule would be the same as what had beenscheduled as of one hour before the earthquake struck.
Although there were differences across the recovery assistance teams as to the level of experience
with past disasters, there was more or less shared awareness of the need to have multi-skilled teams that
could deal not only with the types of equipment and tools used at Riken but also with general issues
related to maintenance, electrical supply, and infrastructure. Past experience had shown which tools andequipment would be needed first and how to get them delivered quickly to a disrupted plant. There wasalso accumulated knowledge about how to secure sufficient food, water, and accommodation for
personnel who came to support Riken’s recovery.
The recovery activities of Riken and its external stakeholders were not limited to supporting only
Riken’s production recovery but were also extended to supporting the recovery of its affiliated companies
and the surrounding community. Riken delivered blankets, cushion mats, and privacy partitions to a
nearby gymnasium that was being used as an emergency shelter for people who could not return to their
damaged or destroyed homes.
Following the earthquake recovery, Riken compiled and released two report booklets (Riken,
2007a, 2007b). The first one (16 pages) was distributed to the public at the end of September and was
directed primarily at the larger community in Kashiwazaki City and all of Japan. The second one (19pages) was printed in December and was directed at the many companies and people who participated in
the recovery operations at Riken.

4.2. Long-Term Measures Implemented After the Earthquake Recovery
In the months following the 2007 earthquake and recovery, Riken announced that it planned to take three
long-term measures. First would be the placement of more inventory closer to its customers in Japan.
Second would be the establishment of another production site in Japan, through which production would
be diversified as a precaution against another major disruption. Third would be an effort to pursue
increased standardization of its products with other piston ring manufacturers. The announcements
followed criticism in the press of Riken in particular and just-in-time (JIT) production in general when it
is coupled with high concentration of production at a single site. However, while the first measure was
implemented, the other two were not.
The first measure has entailed Riken placing a week’s worth of inventory in four new
warehouses, two near Nagoya and two near Tokyo. Riken stores this additional inventory at its own

8expense and says that it bears this additional burden alone as a continued extension of its appreciation to
the automakers that supported its recovery effort. The period of one week was determined based on the2007 recovery experience having taken one week, even in the face of the severe damage caused by thedisaster.
The second long-term measure was reconsidered and, following this further analysis, ultimately
rejected. Riken has not constructed any new piston ring production facilities in Japan after 2007. Thus, it
is clear that the company has chosen fortification instead of diversification. Whitney et al. (2014) describe
fortification as putting all your eggs in one basket and carefully protecting the basket. Riken introduced
numerous measures to fortify its piston ring production site.
Riken strengthened the earthquake-resistance level of all of its buildings in Kashiwazaki City. It
also accelerated the placement of guards on racks to prevent parts, materials, work-in-progress inventory,
and finished goods inventory from falling. Prior to the 2007 earthquake, Riken had been somewhat
reluctant to use anchor bolts on some of its production equipment, due to the difficulties that anchoring
can create when machines need to be moved to make changes and improvements to the layout of
production lines. However, seeing the extent to which equipment fell over in 2007—with the grave
possibility of loss of life had the earthquake occurred at a time when more people were in the plant—
pushed Riken to reconsider its stance. The company is now pursuing an aggressive policy towardanchoring all of its heavier production equipment.
With regard to the third measure, that is pursuing increased standardization of its products withother piston ring manufacturers, additional research is needed to probe this difficult and long-term issue(for more discussion of this topic see Chapter 2 of Fujimoto and Heller, 2017). Riken (2007b) does notaddress this third measure and lists the company’s two key findings from the production recovery
experience as: (1) making more robust production lines that are simpler and shorter, and (2) ensuring thatthe company can meet the target established after the 2007 earthquake to restart production after a majordisaster within one week.
From Riken (2007a) and visits to the company, it is clear that one of the main areas the company
focuses its disaster preparation is in finding ways to get all of its employees to put risk management in theforefront of their activities, so that hidden risks can be made visible and managed. It can reasonably be
expected that by doing so, Riken will be able to achieve its first priority, namely, to protect human life, as
well as fulfill its responsibility as a supplier to keep its supply of parts flowing. A major production
disruption at a supplier will not only stop its customers’ production lines but also the lines of othersuppliers that in JIT production cannot deliver their parts to their customers either, when one supplier’s
supply is interrupted. In this way, Riken’s ongoing commitment to JIT production is a commitment tocontinuing to work closely with its customers and suppliers to improve disaster readiness.

5. Discussion
The Riken case shows that, when faced with a severe production disruption caused by a major disaster,such as an earthquake, timely on-the-spot recovery can be greatly assisted by close cooperation between
the personnel of the disrupted site and recovery assistance teams sent by customers and suppliers. Having
access to such support is especially necessary when plants supply products that are manufactured using
highly asset-specific resources that cannot easily be substituted and there are low inventories of finishedgoods in the supply chain.
However, even if external stakeholders, such as customers and suppliers, have the motivation andability to send relief personnel to support the recovery of a disrupted site, the site (and firm) has to bewilling to accept, even embrace, such offers of help. This willingness will depend on the level of trust
between the disrupted site and its external stakeholders. A firm must have a high degree of confidence
that relief personnel from external stakeholders will not use any knowledge to which they might gain
access during recovery activities to take advantage of the disrupted firm. Such knowledge may include

9

production methods, equipment modifications, information on materials and ingredients, and other formsof valuable information.
Drawing on Sako (1991), Manabe (2002) divides trust into two categories, basic and relational
trust. Having basic trust, which can be thought of as a form of arms-length trust, means that you are
confident that the other side of a contract both intends and is able to keep the terms of the contract. Basictrust is a fully rational basis for entering into a contract in the first place. In contrast, relational trust canbe the sometimes irrational willingness to go beyond what is contractually required when faced withextenuating circumstances, such as a sudden disaster.
Research has shown how the existence of high levels of trust and cooperation between companies
can positively contribute to the overall competitiveness of a supply chain (Asanuma 1989, Nishiguchi
1994, Dyer & Nobeoka 2000, Fujimoto 2001, Takeishi 2001, MacDuffie & Helper 2005). Companies canbuild relational trust, both between OEMs and suppliers and between suppliers, by focusing on joint
problem solving in product development and productive operations (Sako 1996, Manabe 2002, Kato
2016).
One way in which companies increase the level of cooperation in their supply chains is byimplementing just-in-time (JIT) production. In 1984, a Toyota manager, Michikazu Tanaka, described theessence of JIT as not only reducing inventory costs but also the fact that “JIT reveals production problems
and triggers Kaizen (continuous improvement)… (and furthermore) JIT keeps on forcing workers to face
production problems one after another, the people finally start to see everything as a potential source of
cost or productivity problems, and then seek problems actively” (Fujimoto, 1999, p. 271). As people
working in JIT plants seek, find, and solve problems, their problem-solving ability gets better. Since JIT
is by its nature about moving parts between work stations, work lines and plants, it is inherently
cooperative and therefore nurtures the ability of people to work together to solve problems that crosswork boundaries.
In a disaster-induced severe production disruption, problems do not need to be sought for—theyare everywhere. During on-the-spot recovery, the vast number of overlapping problems greatly exceedsthat which is encountered in the daily running of JIT production. However, many of the actual problems
themselves and the pressing need to quickly restore production flows are fundamentally the same as
disruptions that occurs in daily JIT operations, which helps explain how and why the JIT skill sets honed
by Riken and its external stakeholders contributed to the rapid on-the-spot recovery that was achieved in
2007.
The Riken case even revealed a silver lining to the severe disruption, which were the production
improvements that the recovery assistance teams implemented during their efforts. Kaizen thinking andthe high operational expertise of the relief personnel allowed them to make changes to manufacturing line
layouts that improved productivity at Riken beyond what it had been prior to the earthquake.
In closing, the first key finding from the Riken case is that companies with production facilities inearthquake-prone areas should check and, where necessary, strengthen the disaster-worthiness of theirbuildings, including fire prevention measures. Heavy production equipment should be secured withanchor bolts and measures taken to prevent tools and inventory from falling off storage racks. Generalemergency preparations are also needed, such as the installation of auxiliary power sources, food andwater supplies, and planning where and how to supply temporary accommodation for relief personnel
brought in to help with plant recovery and the restoration of local lifelines. Consideration must also begiven and contingency plans made to accommodate the difficult personal situations potentially faced byworkers and managers at the disrupted plant, who may have to deal with injuries or deaths of people close
to them and damage to their own homes or those of neighbors and relatives.
The second key finding is that companies in a supply chain that have built up relational trust
through sustained mutual investments of time and effort into cooperative activities can leverage this trust
to speed up on-the-spot recovery efforts through the sending and receiving of recovery assistance teams.
In this sense, trust building in the ways required for JIT production not only contributes to increased
supply chain competitiveness but may also be the most important disaster preparation that a company canundertake.

10

Returning to the research question posed earlier in the paper, the Riken case suggests two
important characteristics that facilitate the effective management of on-the-spot recovery when a disaster
causes damage that goes beyond the ability of the disrupted firm to recover on its own. First is theexistence of operational excellence and production personnel at the disrupted site with high skill sets incooperative problem solving. Second is the existence of relational trust between a company and its
external stakeholders that can be leveraged to speed up the recovery effort. Companies should recognizethat continually making efforts to build operational excellence and trust in their supply chains can pay off
in times of crisis.

Acknowledgments
This discussion paper is a slightly modified version of a work that was originally published under thesame title as Chapter 4 (pp. 95-116) of the Fujimoto and Heller (2017). The author would like to express
his appreciation to Nova Science for publishing the book and allowing the content of this chapter to bedisseminated in this working paper format. The author would also like to thank Riken Corporation for its
support for this research and the company’s strong commitment to disseminating the lessons that can belearned from its earthquake recovery experience. Daniel E. Whitney and Jianxi Luo made major
contributions to the initial research upon which the case study is based. Natsumi Sakamoto helped withdata analysis.

References
Asanuma, B. (1989). “Manufacturer-Supplier Relationships in Japan and the Concept of Relation Specific
Skill.” Journal of the Japanese and International Economies, 3(1):1-30.
Dyer, J. H., & Nobeoka, K. (2000). “Creating and managing a high-performance knowledge-sharing
network: The Toyota case.” Strategic Management Journal, 21(3):345-367.
Fujimoto, T. (1999). The Evolution of a Manufacturing System at Toyota. Oxford: Oxford University
Press.
Fujimoto, T. (2001). “The Japanese automobile parts supplier system: the triplet of effective inter-firmroutines.” International Journal of Automotive Technology and Management, 1(1):1-34.
Fujimoto, T. & Heller, D. A. (eds.) (2017). Industries and Disasters: Building Robust and Competitive
Supply Chains. Hauppauge, NY: Nova Science Publishers.
Kato, Y. (2016). “Bureaucracy versus Creativity: A Study of Operational Routines and Metaroutines, in a
Japanese Firm.” Management Review: An International Journal, 11(1):40-69.
MacDuffie, J. P., & Helper, S. (2005). “Collaboration in supply chains with and without trust.” In
Heckscher, C., & Adler, P. S. (eds.) The firm as a collaborative community: The reconstruction of trust in
the knowledge economy. Oxford: Oxford University Press, pp. 417-466.
Manabe, S. (2002). “Kigyo kan kyocho ni okeru sinrai to pawaa no kouka—Nihon jidosha sangyo no jirei[Trust and power in interfirm cooperation].” Soshiki Kagaku [Organizational Science], 36(1):80-94 (inJapanese).
Nishiguchi, T. (1994). Strategic Industrial Sourcing. New York: Oxford University Press.

11

Riken (2007a). “Niigataken tyuuetsu oki jishin ni yoru hisai kara no seisan fukkyuu [Production Recovery
after the Niigata Prefecture Chuetsu Offshore Earthquake].” Unpublished report distributed by Riken tocompanies that supported its disruption recovery efforts, September 28 (in Japanese).
Riken (2007b). “2007 nen Niigataken tyuuetsu oki jishin hisai to fukkkyu [Damage and Recovery from the
Niigata Prefecture Chuetsu Offshore Earthquake].” Unpublished report distributed by Riken to the
Kashiwazaki City community and beyond, December (in Japanese).
Sako, M. (1991). “The role of trust in Japanese buyer-supplier relationships.” Ricerche Economiche,
45(2-3):449-474.
Sako, M. (1996). “Suppliers’ Associations in the Japanese Automobile Industry: Collective Action forTechnology Diffusion.” Cambridge Journal of Economics, 20(6):651-671.
Takeishi, A. (2001). “Bridging inter- and intra-firm boundaries: management of supplier involvement inautomobile product development.” Strategic Management Journal, 22(5):403-433.
Whitney, D., Luo, J., & Heller, D. A. (2013). “Supply Chain Disruption Risk and Recovery: Temporary
Diversification and Its Limits.” University of Tokyo MMRC Discussion Paper Series, No. 433, pp. 1-29.
http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC433_2013.pdf.
Whitney, D., Luo, J., & Heller, D. A. (2014). “The benefits and constraints of temporary sourcing
diversification in supply chain disruption and recovery.” Journal of Purchasing and Supply Management,
20(4):238-250.
Yin, R. K. (1994). Case Study Research: Design and Methods, 2nd ed. Thousand Oaks, CA: Sage
Publications.
Yoshimura, K. (2008). “Riken, chuetsu oki jishin no fukyu to kyokun [Riken, Recovery and lessons fromthe Chuetsu Offshore Earthquake].” Safety Japan, Nikkei BP net, 4 September 2008 (in Japanese).
http://www.nikkeibp.co.jp/sj/2/special/325/

12