Message from the President Dec.2008

The other day, I received words from Meitec’s experienced engineers that were so reassuring and encouraging to me that I’d like to share them with you here.

One seasoned engineer said, “The worsening economic situation is desirable for neither the company nor its engineers. But it’s during this time of hardship that an engineer’s real worth is really put to the test. In busy times, clients are likely to renew a contract regardless of our proficiency. It’s not until the market situation turns severe that the question gets asked whether we—as engineers—are truly valuable assets for the client. In other words, it’s in difficult times that clients let us know our true capability as engineers. If we see hard times as an opportunity to find out our real ability, then I’d welcome them once in a while.” Another engineer noted, “During busy times, I get one assignment after another even if I don’t try consciously to get them. But that doesn’t happen when the situation is severe. Unless I aggressively seek an assignment, I’ll never be counted as part of the work force.” Yet another engineer observed, “True capability means you can persuade clients that they must keep you in the division even if there’s no immediate task to carry out.”
We see many kinds of paradoxes when it comes to the growth of people and companies. Take, for example, the issue of whether it’s really desirable for people or companies to always enjoy a smooth growth process, free from serious problems or obstacles. When growth is sustained in a certain environment, people and companies may enjoy greater growth if they’re unencumbered by problems or obstacles. But if this continues for a long time, it can make adaptation more difficult when the environment changes, and there’s a great danger that even growth itself would be inhibited. This paradox has a bearing on the survival-of-the-fittest principle in the theory of evolution: “It’s not the strongest that survive, but those who’ve succeeded in adapting themselves to the environment.” Thus, although in the short run a steady process of growth may be “desirable” for people and companies, in the medium and long term it’d be better if they encountered a few problems and crises and were given an opportunity to acquire the capability to overcome them.

As I look back on the Company’s 34-year history, there were many occasions when tailwinds turned into headwinds in the engineer dispatching business, mainly due to economic conditions, and each time the Company found itself facing a major challenge. It’s no exaggeration to say that the Company has firmly maintained its No. 1 position in the industry up to today entirely because it succeeded in overcoming previous crises. For example, when the economic bubble burst in 1990, the Company’s ratio of back-office staff (percentage of non-engineer staff) was above 15%. On top of that, the operating income ratio was under 10%, which meant that if the engineer utilization ratio fell below 90% the Company would become unprofitable. There was a time when the utilization ratio did drop to close to 80%, threatening our actual survival. Subsequently, we managed to pull ourselves through the crisis and built the Company to where it stands today. Crises like these prompted us to revamp our business operation structure. For instance, currently we try to limit the back-office staff ratio to about 7% and raise the operating income ratio above 15%. This creates a corporate structure that will enable us to remain in business should the utilization ratio fall to as low as 80%. Moreover, we keep our balance sheet free of debt and hold an amount of cash equivalent to two months of the entire Group’s monthly turnover. We do all this because we aim to maintain a corporate structure that ensures the Company can keep paying salaries to its employees even in the global financial crisis that we see today.

At this point in time, it’s extremely difficult to predict how serious the current economic downturn is or how long it’ll last. Granted that changes in the environment surrounding people and companies constitute a serious challenge, but it’s an indisputable fact that overcoming such a challenge offers us the opportunity to grow stronger than ever before. This time, too, I’d like all of the Company’s employees to demonstrate their true worth and turn the present crisis into a chance for further growth. I’m confident of your success, because the source of power that enables you to overcome crises lies in the motivation for further growth of the self.

No matter how great the effort engineers have put in, there are times when their contract isn’t renewed due to the client’s circumstances. So let me add that throughout Meitec’s 34-year history, its engineers have proven that such efforts can be definitely put to good use in your next assignment.