JNR reform
The Japan National Railway (JNR) contributed to the development of the Japanese economy after the World War Two. However, unable to deal with the wave of motorization and resulting changes in the transportation structure, JNR incurred annual debts every year after 1964, suffering a serious deterioration in its business management. In addition, the relationship between labor and management worsened and workers held frequent strikes, which, in turn, caused JNR passengers and cargo consignors to lose trust. Four rounds of restructuring measures were implemented, but failed to bring about improvement. Advocating the need for fundamental reform of management, the 2nd Ad Hoc Commission on Administrative Reform proposed that JNR be divided and privatized. In response, the Supervisory Committee for JNR Reconstruction compiled a set of "opinions on JNR reform," focusing on the breakup and privatization of JNR. Based on these recommendations, JNR was divided and privatized in April 1987.
Division of privatization of JNR
Based on the recommendations of the Supervisory Committee for JNR Reconstruction, the Japan National Railway (JNR) was divided and privatized in April 1987. JNR's railway division, the passenger railway business, was broken down into six companies by region; JR Hokkaido, JR East, JR Central (JR Tokai), JR West, JR Shikoku, and JR Kyushu. To handle the freight business, JR Freight was established as a separate entity. The long-term liabilities of JR Hokkaido, Shikoku, and Kyushu, which were expected to run deficits, were waived. The Management Stabilization Fund was established to stabilize the business of these three island companies initially. Following privatization, the JR Group achieved good performance, thanks to their management effort and favorable management environment. The three JR companies operating on the mainland (JR East, JR Tokai, and JR West) are now listed on the stock exchange. However, 10 years after division of privatization, new problems are surfacing, including the performance gap between the three mainland operators and the three island operator. The freight company is also ailing.
