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(2) JNR first fell into the red in 1964.

 

(3) JNR was privatized and divided into six passenger companies and one freight company in 1987.

 

cf. (1) The situation of JNR during FY 1985 (just before privatization)
Revenue \3,600 billion
Expenses \5,600 billion
Deficit \2,000 billion
Subsidies \600 billion
(2) Long-term debts of JNR in 1987 (just after privatization) \37,100 billion
(more than the combined long-term debts of Brazil and Mexico)

 

3 Problems with JNR

 

(1) Shortcomings of the Public Corporation System

 

Under the public corporation system, while JNR basically ran its own operations, it was totally backed by the government. Thus, there was little concern about the possibility of bankruptcy, and cost consciousness was considerably lacking in both labor and management.
As JNR actually had little autonomy in managing its own operations, management had little sense of responsibility regarding operation of the firm.

 

cf. ◇Fares were determined by law, making it difficult to revise fares in a timely manner.
◇Because management planning was controlled by the government, for example, JNR was seldom allowed to close unprofitable regional lines.
◇Employee wages were linked to those of government employees and raised regardless of the economic and business climate affecting JNR operations.
◇Engaging in related businesses such as real estate and department stores was prohibited in principle. JNR was therefore unable to avail itself of the advantages open to private railways from those businesses.

 

 

(2) Shortcomings of the Single Nationwide Management System

 

◇JNR's giant organization was directly controlled by the headquarters in Tokyo. However, the size of the organization was too large for any single management to properly and responsibly maintain. It was therefore difficult to oversee all operational details including the needs of specific regions.

 

 

 

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