Message from the President Jun.2009

a monthly magazine for our employee Jun.2009

On Not Letting “Rebound” Orders Slip Away

All of you have already been informed of the volume of contracts concluded for April (on an assignment basis), and I’d like to share with you the news that Meitec has succeeded in concluding contracts up to this level despite the harsh environment of a sharp decline in orders received. To extricate ourselves from the current crisis, we have no choice but to exceed our corporate breakeven point without relying on external help, by boosting the number of contracts concluded and raising the engineer utilization ratio. To achieve this goal, our marketing staff have systematically made the rounds of customers, engineers currently on assignment have continued to succeed in getting their contracts renewed, and engineers not currently on assignment have undertaken training, while back-office divisions such as head office, support and EC have worked to upgrade their operational efficiency. All these endeavors have been targeted at raising the number of contracts concluded, and the results were reflected in the April achievements that were announced to you.

Contracts originating from so-called “rebound” orders accounted for a significant portion of the contracts we concluded in April. “Rebound” orders are literally that: swing-back orders. At the risk of making a slight exaggeration, I’d say that the cost reduction measures implemented from the beginning of the year up through March and executed by leading manufacturers who are our clients made it appear that they were in a state of panic. The most common approach taken by companies to counter a recessive economy is “concentration in core competence.” This refers to a strategy of selecting only the business areas where a company excels over its competitors and can survive in the global market and concentrating its management resources on those areas, instead of branching out into one business area after another just because competitors are doing so. The select-and-focus approach entails scaling down or pulling out of businesses that aren’t selected, so that development costs inevitably are reduced or even eliminated, resulting in termination of our staffing contracts in the business areas not selected. In the present economy, however, not only were strenuous efforts made to cut costs in the relinquished areas, but even the areas that were retained underwent severe cost reductions. Thus, the panicked cost-cutting by manufacturers caused Meitec’s engineer utilization ratio to plummet to about 70% (excluding new graduates) on an assignment basis as of April 1. It was the first time since the period from 1992 to 1993, right after the bursting of Japan’s economic bubble in 1991, that our utilization ratio dropped this low.

The business areas that manufacturing companies have decided to keep represent the strategic business which will enable them to ride out the current economic downturn. Consequently, a situation may arise in which manufacturers—after having slashed costs, curtailed development expenses and limited the number of engineers—find that they must meet the same requirements on output and delivery date as before. In some cases, they’ll face increasing demand to do so. Thus, engineers involved in the business areas that were selected for retention must bear an excessive workload. At first, they’ll work together to try to cope with the workload. As the workload remains unabated, however, they may find themselves unable to produce as much output as they’d like or to meet the delivery date. What’s happened here is that companies’ ability to conduct operations has become impaired by excessive cuts in costs and manpower. And this situation prompts clients to come to us with a request to “let them have back ‘that engineer from Meitec’ whose contract expired in March.” We call these requests “rebound” orders. With regard to the rebound orders concluded in April, restitution orders—orders received from clients who acknowledged that Meitec engineers whose contract was scheduled to expire were “indispensable” and who decided to have them back—outnumbered the orders placed by customers who discovered that their operating capability had been impaired.
It may sound like an overstatement, but how to use “time that wasn’t available until now” could change the course of your life. What’s at issue is whether you’re going to do what you wanted to do before but couldn’t for your family or your future, or whether you’re going to just idle the time away. I see discussion taking on how to spend free time. I’ve also heard that one employee has begun taking lessons in English conversation.

In both types of the “rebound orders,” the key players are none other than the engineers currently on assignment. Getting clients to recognize the value of Meitec engineers—even in a work environment with an increasing workload—generates rebound orders. Sharing information with our marketing staff that the client faces a challenging situation can also bring in rebound orders. Here I’d like to express my heartfelt gratitude for the silent efforts our engineers are making to generate orders, and I place a greater expectation on them in the future.

June, 2009