Prospects are Bleak for Reconstruction of Hokkaido City

The Yomiuri Shimbun
The Mount Racey ski resort, whose management company went out of business, is seen in Yubari, Hokkaido, on Jan. 19.

The bankruptcy of a ski resort operator in Hokkaido’s Yubari, the only local municipality in Japan undergoing fiscal reconstruction, has intensified the sense of crisis in the city.

The company is said to have fallen into financial difficulties due to the spread of the novel coronavirus, and large-scale factory closures have also been announced in the city. As the employment situation worsens, there are fears of a further exodus of the population, and residents are voicing concern that Yubari’s financial recovery may be a long ways off.

■ Factories closing

In December last year, just before the beginning of the ski season, Yubari Resort Co. announced that it would suspend operations at the Mount Racey ski resort and the affiliated hotels that the company ran. It cited as a reason the uncertain future stemming from the temporary halt of the Go to Travel tourism promotion campaign. Soon after, the company said that it would go out of business.

The resort and hotels were originally owned by the city, but were sold to the private sector in 2017 to reconstruct its finances. The number of inbound tourists had begun to increase, but the coronavirus pandemic changed the situation, and the company decided it would be difficult to continue operating without the prospect of attracting more customers.

Last July, a subsidiary of Citizen Watch Co. announced that it would downsize its factory in the city by soliciting voluntary retirement, and major seafood company Maruha Nichiro Corp., said in December that it would close its Yubari factory in March this year. The city’s population has fallen to about 7,500, less than one-tenth of its peak, and with no end in sight to the outflow, more than 100 residents are expected to be forced to leave their jobs, including the employees of the bankrupt Yubari Resort Co.

■ Request for support

Yubari Mayor Tsukasa Atsuya visited the Hokkaido prefectural government office on Jan. 22 and submitted a request to Hokkaido Gov. Naomichi Suzuki, a former Yubari mayor, asking for support in finding new jobs. Suzuki expressed his willingness to consider such support, saying, “We want to minimize the impact on the local economy.”

Atsuya told the press, “It’s a tough situation, but we want to help people find new jobs in the city.”

However, the shuttering of the city’s only ski resort, which usually attracts several hundred visitors a day in winter, on the heels of the factory closures, is a severe blow to the city. A woman who lives near the resort said, “Almost no one comes from outside the city anymore. I’m worried that it will turn into a huge ruin.”

She expressed her fears as she looked at the hotel, its entrance covered by a huge amount of snow. People who have left their jobs in Yubari have also voiced concern, saying it is not realistic to expect new employment in the city.

■ Financial impact

The ski resort and affiliated hotels operated by the bankrupt Yubari Resort are now owned by another company. This other company is expected to survive, and the city said it does not anticipate a significant decrease in property taxes.

However, according to the lawyer handling Yubari Resort’s situation, the company has debts of more than ¥500 million, and there is no prospect of repayment.

The city is planning to calculate the number of employees who will lose their jobs and the specific impact on the city’s finances. A city council member said: “The plan for financial reconstruction is based on the premise that the existing facilities and companies will continue to operate, so the city needs to make trial calculations as soon as possible.”

Yubari prospered from coal mining, but saw its finances deteriorate when the mines were closed. The city tried to change its industrial structure under the slogan, “From coal mining to tourism,” but it did not succeed and went bankrupt in 2006. Yubari is now under the control of the central government and aims to pay off its debt of ¥35.3 billion by fiscal 2026 based on its financial reconstruction plan.