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2) JNR first got into the red in 1964.
3) JNR was privatized and divided into six passenger companies and one cargo company in 1987.
cf. 1) The situation of JNR during FY1985 (just before privatized)
revenue \3,600 billion
expense \5,600 billion
deficit \2,000 billion
subsidy \ 600 billion
2) Long-term debts of JNR in 1987 (just privatized)
\37, 100 billion (exceeding the combined amount of long-term debts of Brazil and Mexico)

3 Problems with JNR

1) The Shortcomings of the Public Corporation System
Under the public corporation system, JNR basically ran its own operations, but was totally backed by the government. They had thus little concern about the possibility of bankruptcy. Cost consciousness was considerably lacking in both labor and management.
As JNR actually had little autonomy in managing its own operations, its management had little sense of responsibility in the operation of its own firm.
cf. * Because fares were determined by law, it was difficult to revise fares in a timely manner.
* Because management planning was controlled by the government, for example,. JNR was seldom allowed to close its unprofitable regional lines.
* Employee wages were linked to that of government employees and raised in disregard of the economic and business climate affecting JNR operations.
* Engaging in related businesses such as real estate and department store was prohibited in principle. JNR, therefore was unable to avail itself of the advantages as private railways got from those businesses.
2) The Shortcomings of the Single Nationwide Management System
JNR's giant organization was directly controlled by the headquarters in Tokyo. The size of the organization was so large that no single management could properly and responsibly

 

 

 

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