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At 5:46 am on January 17, 1995, western Japan was rocked by the most destructive earthquake to hit the region. The devastation was the worst in the port city of Kobe, where the 7.2 magnitude quake toppled roadways, wrecked docks, severed communication lines and kept the city in flames into the next day. The quake has taken the lives of more than 5,250 people. Most died in their homes when the earthquake struck. Almost 30,000 people are reported injured causing a massive strain on area hospitals. More than 400,000 people are homeless, filling makeshift shelters swollen to capacity. The death toll grew steadily as rescue teams moved frantically to try and reach those who were trapped under the rubble. Approximately 88,000 buildings have been reported destroyed.

Hardly a block in this industrial port city of 1.4 million people had a house or building intact. Many streets were reduced to piles of rubble. Kobe is the sixth largest port in the world and the gateway for 12% of Japan's exports. No earthquake had struck any major Japanese urban center with such destruction since the great Kanto earthquake of 1923 which killed 140,000 people in Tokyo and Yokohama. Officials expect more than a thousand aftershocks will hit the region in the near future.

Japan is one of the most geologically unstable places on Earth. It has 40 active volcanoes and as many as 1,500 tremors are recorded annually, most of them being minor. In Japan the earthquake is addressed continuously in architecture and civil defense planning. The majority of buildings that collapsed were those with wooden walls that succumbed when the quake rocked their heavy tile roofs. Steel-frame buildings built after 1981 remained virtually undamaged. This was due to their "ductility," the ability to bend without collapsing. As a result, the pre-1981 buildings were left in ruins while the post-1981 buildings held up relatively well.

Tokyo escaped unscathed. The quake was barely felt in the capital located 280 miles to the east where people, awed by the destruction, gathered around televisions. The shaking lasted for 20 seconds and snapped vital lifelines to Western Japan. The worst damage was along the Hanshin Expressway, a major artery between Osaka and Kobe, which collapsed in five places killing 12 drivers.

Other national highways were damaged in 20 locations. The Shinkansen, or high speed "bullet" trains rails were damaged in 36 places and will be closed for at least three months. Local and commuter trains sustained vast damage. The earthquake shattered Japan's belief that sophisticated engineering would enable its newer buildings and roads to withstand a major quake.

The day after the earthquake hundreds of thousands of Kobe residents packed the roads leaving the ruined city. They traveled on foot, bicycles and packed automobiles. Others were trying in vain to enter the city to search for relatives and friends. The airlines were only slightly delayed after Kansai International Airport built on Osaka Bay was closed temporarily the day of the quake.

The earthquake in Japan, the USA's second largest trading partner, has so far had few aftershocks on the U.S. economy, businesses or consumers. The impact should remain light, except for one troubling issue. With damage estimates approaching $100 billion (several times the damage caused by the earthquake in Los Angeles last year) the Japanese government and Japanese insurers are poised to issue a large number of bonds to help pay for rebuilding. This in turn could boost global interest rates.

While shipping containers continue to pile up on California docks, a search for an alternative port other than Kobe is underway. Kobe is Japan's second largest port with more than 30% of all Japanese trade passing through, with a total dollar value equal to the GNP of Canada. Kobe was also an important relay port for China and Korea. Incoming vessels are now being redirected to Yokohama and Tokyo to deliver their goods. Experts think it will take at least a year to repair the damaged port.

Ironically, only three percent of the 350,000 people left homeless have earthquake insurance. A larger portion have fire insurance, but the policy is useless if the fire was caused by an earthquake. This is because Japanese insurance companies make earthquake insurance one of the most expensive policies to buy as well as having the most stipulations. Many Japanese are now trying to seek policies from foreign insurance companies.

The Japanese economy is recoiling from the earthquake in Kobe, but eventually a spurt from reconstruction should help. This means the earthquake will have no effect on Japan's gross domestic product in 1995. Stock investors are keeping their eyes open for "earthquake plays," stocks of companies that might take part in the enormous rebuilding effort under way in Kobe. However, few companies are anxious to go on record as wishing to capitalize on the devastating quake. The most impressive stock plays are issues of Japanese companies expected to have the largest hand in the rebuilding effort. This includes Japanese construction companies, contracting and reinforcement companies, and companies that make temporary housing.

The Kobe, Japan, Earthquake

By Benny D. Taylor, CDRP, Texas Instruments

When the duty manager of Texas Instruments' Worldwide Command Center in Dallas, TX received notification that the communications to TI's joint venture manufacturing plant were down, he had no idea to what extent he would be involved in recovery operations for Japanese business operations. This notification came within minutes of the Kobe 7.2 earthquake on Tuesday, January 17, 1995.

The Worldwide Command Center duty manager realized that he and the Dallas based Information Systems and Services (IS&S) team would be getting involved in providing disaster recovery operational support to the Kobe/TI Semiconductor, Inc. plant.

Although no TI plant was impacted by the Kobe quake, this joint venture semiconductor plant, located about 30 miles North of Kobe, was affected. The venture, Kobe Texas Instruments (KTI) Semiconductor, Inc., employs about 400 people and is jointly owned by T.I.. and Kobe Steel Ltd. TI owns 25 percent and Kobe Steel Ltd., 75 percent. The plant manufactures the 4 and 16 megabyte dynamic random access memories (DRAM) for Texas Instruments.

By mid-morning on the day of the quake, the KTI plant manager reported that there were no injuries to plant employees, and that the KTI manufacturing facility had incurred no structural damage. Some production equipment shifted during the quake, and the remote computer processing support was interrupted--no estimate as to full impact of damages at the remote computer center were known.

Once the full extent of the damages were know--Tuesday, the 17th about noon (CST), the Dallas based IS&S management team formed a Kobe TI Recovery Team. The team established a command center and a call-me telephone bridge for daily team meetings. From the Dallas Worldwide Command Center and the Kobe TI Recovery Team Command Center, all recovery operations were controlled--all decisions jointly discussed and fully implemented.

The Miho computer center had just completed a major technology upgrade during the Christmas holidays. A spare IBM 3090-600 remained on the Miho computer room floor and it was prepped to host the recovery of the Kobe operating system.

The Dallas team was concurrently coordinating the activity of three individual teams: The Miho site restoration team using the surplus IBM 3090-600 processor, the shipment of Kobe Steel Ltd. computer center tapes and DASD to Miho, and the combined IBM-U.S. and IBM-Japan teams who were sourcing strings of DASD (12 volumes) and an IBM 3725 communications controller.

By Thursday, January 19th, all of the essential components necessary for a successful recovery had been assembled at TI's Miho computer center. As the Miho team concentrated on installing, cabling and testing the computer and communications hardware on the Miho computer room floor, the Dallas IS&S team concentrated on documenting the Kobe system recovery slips. The recovery script was produced in less than 48 hours using the TI Universal Manufacturing computer center disaster recovery plan (DRP) script.

By the end of the third day of the KTI recovery, the Kobe operating system had been loaded on the 3090-600. The required DASD had been received from IBM Japan, as well as a critical IBM 3725 communications controller.

It was on Friday, January 20th, that the KTI plant manager declared that all production equipment and test equipment had been completely re-calibrated and that the plant was awaiting the recovery of the computer systems. This semiconductor plant, like many other TI plants, is fully automated and totally dependent upon its semiconductor manufacturing system for its process control.

On day five the semiconductor manufacturing system was recovered to the point of the last tape backup. Now that the factory was in operation, the recovery team took on the task of recovering the applications to the actual point of the interruption. The significance of this restoration of the applications to the actual point of interruption, permitted the KTI manufacturing process to capture all data points necessary to restart the process without loss of any product in the "work in progress" status saving the TI plant $8million--product that otherwise woudl have been scrapped.

The Shock Heard "Round The World'

By John Nevola, ISSC

It was almost uncanny! It was almost as if mother nature decided to say "happy birthday" to the Northridge Quake with another earth-shattering event in Kobe, Japan. Before you point out that the Northridge Earthquake took place last January 17, 1994 and the Kobe quake took place on the sixteenth of January, 1995, keep in mind that Japan is on the other side of the international dateline and it was a day later than in the States; the seventeenth of January! Beyond the coincidence of dates, however, these two earthquakes had little in common when viewed from the perspective of impact to life, property and to the Japanese and world economies.

It will be known for all time as The Great Southern Hyogo Earthquake, named for the prefecture within whose boundaries the port city of Kobe is situated. In just 20 seconds, this crowded, prosperous and bustling center of industry was transformed into a muddle of death and debris. According to geologists, Northridge released the power of its energy in a vertical thrust while the Kobe event exerted a horizontal force that shifted the fault line nearly five feet.

The city of Kobe is one of the most important centers of industry in Japan. With 10% of the population, a full 20% of the gross domestic product flows through this modern city. The port ( the second largest in Japan and the sixth largest in the world) handles 12% of all worldwide Japanese exports and fully 31% of all exports to the United States. All but 4 of the 239 shipping berths were damaged in the quake and this is expected to put a huge dent in the port's transport capacity; a robust 2.7 million containers shipped each year. Manufactured goods from Mitsubishi, Mazda, Toyota, Hosiden (which manufactures liquid crystal screens for laptops) and many other companies with facilities in the area will have to find another means of shipment for the foreseeable future. That is, of course, after they have recovered their businesses sufficiently enough to resume full production. United States based companies with facilities in Kobe like Proctor & Gamble, Eli Lilly, Caterpillar, Texas Instruments and others also suffered at the hands of this disaster but showed a remarkable resiliency in their ability to react and respond. Why is this disaster unique among the many that have occurred in recent times? What happened in the immediate aftermath of this quake and what lessons are to be learned?

Japan has a unique and closely guarded business tradition that is deeply rooted and widely held. One of the mainstays of that tradition is the belief in, and the commitment to, the value of long term planning. The acceptance of this principle is so widespread and the efforts at planning so thorough and precise that contingency plans are not usually developed. The reliance on the effectiveness of this planning is so complete as to make spontaneous action and flexibility very difficult. Kobe, the people were told, was built with state-of-the-art techniques and construction methods designed to withstand severe earthquakes. They believed a disaster could never happen and they were not only wrong but ill prepared to respond to the emergency.

There was no immediate response when the quake subsided. Four hours passed before the governor of the Hyogo Prefecture asked for help from the Japanese Defense Forces. It took the JDF another 5 hours to respond and a full two days before they arrived in Kobe in force. Japanese Prime Minister Tomiichi Murayama all but confessed that a lack of preparedness and bureaucratic bungling significantly delayed recovery efforts. Teams of doctors arrived only to be held at the airport for three days because they did not have the necessary licenses to practice in Japan. It took 2 days to get the necessary permission to have 50,000 blankets shipped in from the United States. Tons of emergency supplies stockpiled on US bases in Japan were delayed for days and then only specific items like tents and plastic sheets were requested. Of the 60 nations that offered assistance to the Japanese government, only 20 offers were accepted.

The lack of a workable contingency plan played havoc with the businesses in the immediate areas, particularly for suppliers of parts and components. The widespread Japanese business practice of kanban , the just-in-time inventory methodology, was particularly vulnerable to this type of disaster. Even those plants not in the immediate vicinity of the quake were affected if their suppliers suffered any loss of production whatsoever. There is little if any slack in the precisely tuned flow of component parts and the slightest disruption of even one supplier, or the transport of the component parts, had an inordinate ripple effect up the line to the main manufacturing plant. The tightly coupled interrelationships between suppliers and producers, intensified by inadequate contingency plans, caused disruptions in the flow of materials and on manufacturing that were more significant than they should have been.

The concept of business recovery planning, particularly as it relates to consulting and alternative recovery facilities services, is not as well practiced in Japan as it is in the States. There are no governmental regulations that govern the ability to resume business in the event of a disaster. Most of the companies in Japan are members of a certain keritsu, a family of businesses with common interests that rely upon one another in times of need. It is not unusual for members of a business family to come to depend upon one another with a reciprocal agreement for data processing recovery support. We have come to learn how inadequate reciprocal agreements truly are and more companies in the States are migrating away from them and availing themselves of the full range of services and equipment the US recovery industry has evolved to. That notwithstanding, the l ack of regulatory pressures along with closely knit corporations in a mutually protective business climate has not been entirely fertile ground for the growth of a commercial business recovery industry. As a result, the mature and widely accepted business recovery industry as we know it in the United States is still emerging in Japan.

There were approximately 1700 computer systems in the Kobe area that were somehow affected by the earthquake. The majority of the efforts at recovery involved repair or replacement of computers and peripheral equipment. Over 650 IBM Japan Customer Service Engineers were dispatched into the Kobe area after the quake. They came from all over the country. They brought sleeping blankets, food and clothing with them so as to be able to stay at the customers' locations overnight. Whatever equipment could no t be repaired was replaced. Many customers relocated to areas outside Kobe where replacement equipment was shipped. There were many heroic efforts and wonderful stories of dedication and commitment to customers and some even were able to resume processing within the week. However, there were too few stories of customers executing a previously prepared and fully tested business recovery plan and resuming business within a prescribed time-line.

There were exceptions but they came mainly from Japan based offices of US companies. Proctor & Gamble moved quickly to resume business operations from Osaka after their 30 story office building in Kobe was damaged. The best example, however, was that of Texas Instruments. This US based company has been involved in business recovery planning at a corporate level for nearly 10 years. Led by Ben D. Taylor, a recognized disaster recovery industry expert and TI's Manager of Contingency and Disaster Recovery Planning, the worldwide electronics manufacturer had worked assiduously to design, develop and refine their recovery plans and scripted restoration instructions to a remarkable level of accuracy and precision.

When the Kobe center went down, they were without equipment and without plan. A stroke of luck provided the equipment (they had recently upgraded and the replaced equipment was still handy and available) and a stroke of genius provided the plan. Since Dallas-based TI has worldwide responsibility for applications and systems software, the Japan based systems were virtually identical to the Dallas systems. Ben's team went to work to fine-tune the fully tested recovery scripts and transmitted them to Japan where they worked to perfection. The systems were recovered and operational in about four days. While a marvelous feat, it was not exactly planned to work this way. What made it work, however, was the skill and expertise of a few dedicated people who had previously refined their recovery scripts on the strength of their commitment to contingency planning and testing. Had there been no recovery scripts or had they not been so rigorously tested and precisely refined, it is highly unlikely that this recovery could have taken place anywhere near the relatively short time it took.

As a matter of fact, many US companies with offices in Japan tried valiantly to assist in the business recovery efforts. All of the major recovery industry providers of service, in turn, tried to assist their US subscribers in their exertions to assist their overseas counterparts. Unfortunately, in too many cases, the monumental efforts of many people were not able to achieve after the fact what a fraction of the effort could have achieved before the fact. If there are any lessons to be learned from this disaster, they are certainly not new ones.

Firstly, the age old bugaboo, it can't happen to me, is still as false and empty as it has always been. Regardless of the precautions taken and the assurances given, a disaster can strike at any place at any time. Too many business executives, in many countries, remain in a state of denial about this unshakable truth. It is far more responsible to plan and prepare for a disaster than to deny its possibility. Kobe was virtually destroyed by a disaster that no one was prepared for because it was never supposed to happen!

Second, planning for recovery from a disaster must be realistic and reflective. This requires an accurate business impact analysis to determine what needs to be recovered and how long a period of time that recovery can consume without adversely impacting a business. In addition, a well-drilled recovery plan is required to ensure that the recovery process can be successfully implemented. The heroic efforts to restore services in the aftermath of the Kobe quake were, for the most part, ad hoc. This was true for both the recoveries of the city's infrastructure as well as for the businesses that were impacted. Without a plan, it is impossible to predict or expect a successful recovery. Why, then, do so many companies still leave the outcome to chance?

The after effects of the Kobe Earthquake will be felt around the world. The manufacturing and shipping delays promises to create shortages of certain products across the globe. The shortages will eventually be made up and the Japanese economy is healthy enough to absorb the cost of rebuilding the torn city. Had this catastrophe befallen Tokyo, however, with 31 million inhabitants and a highly centralized and densely packed corporate leadership structure, the results would have been significantly worse.

The lessons of this catastrophe are already being absorbed by both government and business officials alike. More stringent construction standards are being called for, particularly for the rebuilding of Kobe which remains on a major seismic fault line. Many Japanese companies are reconsidering their business recovery plans and appear more open to considering service providers to deliver this unique and specialized service. US companies with overseas facilities with data processing centers are making arrangements to cover those sites with backup facilities based in the States. This disaster, as so many before it, has turned many nonbelievers into vocal proponents of thorough contingency planning.

The tremor that sent ripples across the Pacific to the far reaches of the globe has now passed into history. But the ripples will remain visible for a long time to come. The follow-on consequences to the world's economy, as well as that of Japan, are yet to be appreciated but will almost surely follow. The consequences to companies will also surely spawn a new wave of consciousness in the area of business recovery planning and testing. Perhaps even those fortunate souls not directly impacted by this event will finally wake up and take notice. After all, in the final analysis, the most we can hope for is that the key decision-makers in government and business around the world will become more insightful from this experience. Then again. .... maybe they won't!