The Fukushima Dai-ichi Power Plant Meltdown:
The Impacts on Japan and Global Industries
A Term Paper
Presented to
MBA 502: Emerging Issues in Global Business
Stuart School of Business
Illinois Institute of Technology
In Partial Fulfillment
Of the Requirements of the Degree
Masters of Business Administration
By
John Spearman
Spring 2013
Abstract
This paper examines the role of the Fukushima Dai-ichi Power Plant meltdown on global business. In recent years the nuclear industry believed a “nuclear renaissance” was in the making. There are sixty-three nuclear reactors being built worldwide, including twenty-six in China alone. This nuclear disaster is an important event because it is only the second ever event of such a large scale. It is also important because the location, Japan, is a major global power and the can impact the global markets. This paper looks atexamines the nuclear industry trends before and after Fukushima. In addition, the paper looks atit examines the impacts to the economy, the trade and healthcare industries.
Introduction
On March 11, 2011, Japan was struck by a series of disasters. The initial 9.0 earthquake and following tsunamis devastated the nation. Adding to the tragedy was the resulting equipment failure, nuclear meltdown and release of radioactive materials at the Fukushima Dai-ichi Nuclear Power Plant. The tsunamis reached a height of 45 feet (14 meters) while the power plant was only protected up to 33 feet. The radioactive material release contaminated food and water supplies, and lead to the evacuation of 160,000 residents. The plant had 6 boiling water reactors, three of which were shutdown before the earthquake and the other three reactors were shutdown immediately after the earthquake. Nevertheless, when the tsunami struck the power plant it flooded the facility, caused a power loss to the pumps that cooled the reactors and lead to the eventual meltdown of the three remaining reactors.
The meltdown at Fukushima was rated a seven on the International Nuclear Event Scale (INES), the scale’s highest rating indicating an accident causing widespread contamination with serious health and environmental effects. This disaster was only the second ever rated seven event by the INES, the first was the 1986 Chernobyl accident.
In recent decades nuclear energy has been gaining support worldwide, in traditional nuclear energy nations and emerging economies. The United States Congress voted to provide large tax credits and loan guarantees to a limited amount of new nuclear reactor units.
“A number of considerations drove this interest in new plants: (a) policies to promote low- and no-carbon electric generation resources to meet targets for global reductions in CO2 emissions by 2020 and 2050 which had favorable effects on political and public policies toward nuclear power; (b) a more favorable regulatory environment in the U.S. for approving applications for new nuclear plants; (c) significant improvements in the performance of nuclear power plants in many countries (though not in Japan), with capacity factors in the U.S. reaching an average of 90% over the last decade, as safety indicia improved; (d) rising fossil fuel prices, especially natural gas prices during most of the first decade of the 21st century, and concerns, especially in Europe, about dependence on Russia and a few other countries for natural gas supplies; (e) a new generation of nuclear power plants that were designed to be safer and were advertised to have low construction costs and the ability to quickly achieve high capacity factors to make them competitive with alternative base load generating technologies; (f) heavy promotion of these virtues by the major multinational nuclear power vendors and equipment suppliers; (g) announcements by some governments that had previously rejected nuclear power that they would reevaluate their earlier decisions (e.g. Italy, Spain, and
