According to the central bank's Tankan report, the diffusion index of business sentiment among major manufacturers stood at minus 47 in March, an improvement of two percentage points from the previous survey in December. The index for major nonmanufacturers stood at minus 34, up five points from the previous survey. Business sentiment among smaller manufacturers and nonmanufacturers has also improved. Nonetheless, businesses are saddled with a huge net excess in supply, estimated at between 30 trillion yen and 50 trillion yen. In a bid to reduce production costs and raise profitability, businesses are intensifying efforts to dispose of excess facilities and staff.
Corporate managers consider the excesses in supply a structural, rather than cyclical, problem.
NEC Corp. also plans major corporate restructuring that includes cutting 15,000 jobs, about 10 percent of the group's workforce, by fiscal 2001. In the automotive sector, domestic production totaled 10.04 million vehicles in 1998, compared with 13.48 million in 1990. Nonetheless, the automobile industry as a whole is said to be producing 3 million vehicles too many. Nippon Oil Co. Domestic crude steel output is projected to fall below 90 million tons in fiscal 1999. Companies are making efforts to pay off debts accumulated in the wake of the bubble.