2011 Edition. MNCs with Japanese Expatriates: Response to Mid-March Disasters

Transcription

1 2011 Edition

2 About Mercer Mercer is a leading global provider of consulting, outsourcing and investment services, with more than 25,000 clients worldwide. Mercer consultants help clients design and manage health, retirement and other benefits and optimize human capital. The firm also provides customized administration, technology and total benefit outsourcing solutions. Mercer s investment services include global leadership in investment consulting and multimanager investment management. Mercer s global network of more than 20,000 employees, based in over 40 countries, helps ensure integrated, worldwide solutions. Our consultants work with clients to develop solutions that address global and country-specific challenges and opportunities. Mercer is experienced in assisting both major and growing, midsize companies. The company is a wholly owned subsidiary of Marsh & McLennan Companies, which lists its stock (ticker symbol: MMC) on the New York and Chicago stock exchanges Mercer LLC. 1

3 Executive Summary On 11 March 2011, a 9.0 magnitude earthquake hit northeastern Japan, promptly triggering a tsunami and causing major devastation across many regions of Japan. The Fukushima Nuclear Power Plant in northeastern Japan, close to the quake s epicenter, suffered major damage. As a result, radiation exposure continues to threaten the Japanese population. To provide clients with the most up-to-date information, Mercer conducted a quick survey in the fourth week of March to determine how companies are securing the safety of expatriates in Japan. The survey covered company actions pertaining to expatriates; a separate survey will be available soon on how multinational companies are ensuring the safety of local Japanese employees. Initial responses to damage: For the most part, participants reported minor or no damage to operations as a direct result of the earthquake and tsunami. But 26% of companies with facilities in northeastern Japan suffered major devastation to their operations. As a result, in Tokyo, 37% of companies are monitoring the situation, while 29% are offering voluntary evacuation. In northeastern Japan, 26% have shut down their operations. Response to radiation threat: Threats of radiation are more prevalent in northeastern Japan (49%) and in Tokyo (39%) than in other areas. As a result of possible radiation contamination in Tokyo, 37% of responding companies are monitoring the situation and 29% are offering a voluntary evacuation for expatriates and their families. Twelve percent have shut down their Tokyo operations, and 8% are enforcing a mandatory evacuation. In northeastern Japan, 48% are monitoring the situation, 19% have shut down operations, and 15% are offering voluntary evacuation. Survey respondents A total of 181 companies responded to our survey, representing an expatriate population of 2,200 in Japan and a local Japanese employee population of 256,000. Participating companies were based primarily in the West, with half located in the United States. Sixty-four percent have headquarters in the Americas, 25% in Europe and 10% in Asia Mercer LLC. 2

4 Executive summary Responses of MNCs with Japanese expatriates: Company actions in response to earthquake/tsunami damage (as of late March 2011) 32% 44% 40% 37% 26% 12% 7% 7% 20% 17% 15% 15% 9% 5% 15% Mandatory evacuation Voluntary evacuation Company shutdown Monitoring situation No planned measures From/In Tokyo From/In Northeastern Japan From/In other areas of Japan Responses of MNCs with Japanese expatriates: Company actions in response to possible radiation contamination (as of late March 2011) 48% 47% 34% 37% 11% 12% 11% 22% 17% 12% 19% 8% 5% 4% 13% Mandatory evacuation Voluntary evacuation Company shutdown Monitoring situation No planned measures From/In Tokyo From/In Northeastern Japan From/In other areas of Japan Evacuation programs: Seventy percent of responding companies have an established program for evacuating employees, split fairly evenly between formal (33%) and informal (37%) plans. Political unrest/war (88%), natural disaster (86%), epidemic/medical concerns (81%) and radiation (70%) all activate the program for most responding companies. In just over half of companies, the evacuation program has been put into effect in Japan. Among those that continue to monitor the situation, events such as the employee s request to leave (71%), home-country government or embassy press releases (69%) and the company evacuation plan (54%) prompt evacuation Mercer LLC. 3

5 Executive summary Evacuation destinations: Destinations for evacuees did not vary significantly based on who or what initiated the evacuation. The home country was the most popular response, as reported by 39% of participants, followed by Singapore (19%), Southern Japan and Hong Kong (both with 13%), and the Philippines (3%). Other locations mentioned included Shanghai, Australia, Taiwan, Thailand, Korea and Hawaii. Expatriated employees status: Among companies returning expatriates to their home countries, only 9% will repatriate them permanently. In 52% of cases, employees are expected to work from the home location, while 17% are treating the evacuation as a home leave trip and 9% as vacation. These statistics are similar to those reported if the employee chose to leave Japan on his or her own, regardless of whether the company has activated its evacuation plan. In 69% of companies, expatriates left Japan on their own. In these cases, 62% of employees are working remotely, 12% are taking a home leave trip, 9% are taking vacation time, and 3% are taking unpaid leave. Evacuation expenses covered: In 86% of companies, employers are providing airfare to employees evacuated to the home country. For those employees, 48% of employers will cover accommodations, 47% will cover transportation such as rental cars or taxis, and 32% will cover meals. For 65% of responding companies, actual expenses are used to calculate coverage, while 18% are providing a per diem payment. All related evacuation expenses are covered by 81% of participants when initiated by the company and by 72% when initiated by employees. In almost all cases (98%), airfare is treated as an evacuation expense; most participants also consider accommodations (77%), transportation (68%) and meals (54%) as evacuation expenses. Allowances: Expatriate-related allowances are handled the same regardless of who initiated the evacuation; 66% will continue the allowances without interruption, 13% will continue up to a maximum number of days (mode: 30 days) before reviewing, and 11% will suspend all allowances for the period of evacuation. Duration: The length of evacuation is not affected by the cause as a result of the earthquake, tsunami, and possible radiation contamination, 71% of companies will evacuate for as long as required with no maximum number of days imposed. Conditions before expatriates return: Before returning expatriates to Japan, in 65% of companies, safety recommendations are required from respective home country authorities, and in 63% recommendations from internal company departments are also consulted. Just under half will review external security consultant recommendations as well. No extra incentives: When expatriates have chosen to remain in Japan, or if no evacuations have occurred, companies are not providing extra incentives to expatriate employees. While there are reports of some supply shortages, hoarding is not a typical Japanese response, and price gauging contradicts Japanese culture. Consequently, just 6% of participants are providing an increased cost-of-living differential, and another 6% are providing a special allowance to cover price spikes due to shortages in Tokyo Mercer LLC. 4

6 Executive summary Hardship premiums: While Japan is not a typical hardship location, 72% of companies will implement a new hardship premium if a recommendation is received from a data provider (49%), from management (27%), from the home-country government (10%), or from other sources (5%). Loss of housing: For employees suffering housing destruction, 30% of companies are providing some form of assistance over and above what is provided by the government or by insurance. We will report soon on multinational companies with Japanese operations and their efforts to ensure the safety of their local nationals there in response to the earthquake, tsunami, and radiation threats. Meanwhile, Mercer s consultants in Japan and our international consultants around the world will continue to work with clients to protect employees in Japan and to enhance their effectiveness during these challenging days. Along with your responses, many of you expressed an interest in learning more about how employers are working with their national staff and not just expatriates. So Mercer is offering a complementary survey covering aid for Japanese local employees. To participate click here Mercer LLC. 5

7 Survey Responses Survey respondents, by country (N=181) 50% 2% 1% 1% 2% 2% 2% 4% 6% 4% 2% 1% 6% 2% 1% 1% 1% 8% 2% 1% 4% 1% Australia Belgium Brazil Canada China Denmark France Germany Hong Kong India Italy Japan Korea Malaysia Mexico Netherlands Singapore Switzerland UAE United Kingdom United States Venezuela Survey respondents, by industry (N=181) 42% 25% 15% 8% 9% Consumer Products Financial Services Life Sciences Manufacturing Other 2011 Mercer LLC. 6

8 Survey respondents, by HQ location (N=181) 64% 25% 10% 1% 0% Africa Americas Asia Europe Middle East Survey respondents, by annual revenue, 2010 (N=170) 44% 26% 30% Less than USD 1 Billion USD 1B - USD 10B More than USD 10 Billion 1. Approximately how many employees does your company have in Japan? Total Average Total Local Average Local Expatriates Expatriates Employees Employees In Tokyo 1,470(N=129) 12 64,637(N=133) 497 In northeastern Japan 133 (N=9) 19 21,614 (N= 33) 720 In other areas of Japan 573 (N=39) ,849 (N= 58) 3, Mercer LLC. 7

9 2a. Does your company have an established program for evacuation in the event of an emergency? N=179 Yes, a formal evacuation program 33% Yes, an informal evacuation program 37% No 30% 2b. If yes, which of the following would cause your company to activate the program? (More than one answer could be selected.) N=128 Political unrest/war 88% Natural disaster 86% Epidemic/medical concerns 81% Radiation 70% Other (1) 10% (1) Evaluated per situation; work place violence; civil unrest; any life threatening situation 2c. If yes, has your evacuation program been put into effect in Japan? N=133 Yes 51% No 49% 3. Does your company have a system in place for tracking the exact locations of your expatriates? N=175 Yes 64% No 36% 4a. Are your company s operations in Japan currently affected by threats of radiation? In Tokyo In northeastern In other areas Japan of Japan N= Yes 39% 49% 12% No 61% 51% 88% 2011 Mercer LLC. 8

10 4b. If yes, what measures is your company taking as a result of possible radiation contamination? From/In From/In From/In northeastern other areas Tokyo Japan of Japan N= Mandatory evacuation of expatriate and family 8% 8% 8% Mandatory evacuation of family only 3% 4% 3% Voluntary evacuation of expatriate and family 29% 15% 20% Voluntary evacuation of family only 5% 2% 2% Company shut down for a specified period 12% 19% 8% Monitoring situation 37% 48% 47% No planned measures 5% 4% 13% 5. If your company has not yet evacuated expatriates, or if your company is monitoring the radiation situation, what events would prompt an evacuation? (More than one answer could be selected.) N=127 Employee s request to leave 71% Home-country government/embassy press statements 69% Company evacuation plan 54% Third-party evacuation company information 34% Other companies actions in the affected location 32% Other (1) 10% (1) Regional Health Agency Guidance; top management decision; partner organization; unsafe conditions; not yet determined; expatriate left voluntarily; Japanese authorities; corporate and local security officers. 6a. Were your company s operations in Japan affected by the tsunami or earthquake? In northeastern In other areas In Tokyo Japan of Japan N= Yes, major devastation 1% 26% 3% Yes, minor damage 42% 54% 24% No, not affected 57% 19% 74% 2011 Mercer LLC. 9

11 6b. If yes, what measures is your company taking as a result of damage from the tsunami and/or earthquake? From/In From/In From/In northeastern other areas Tokyo Japan of Japan N= Mandatory evacuation of expatriate and family 3% 12% 7% Mandatory evacuation of family only 4% 0% 0% Voluntary evacuation of expatriate and family 29% 10% 20% Voluntary evacuation of family only 3% 7% 0% Company shut down for a specified period 15% 26% 15% Monitoring situation 37% 40% 44% No planned measures 9% 5% 15% 7. If your company has not yet evacuated expatriates, or if your company is monitoring the entire situation in Japan and expatriates have left Japan on their own (due to increased safety concerns), how is your company handling the situation? (More than one answer could be selected.) N=140 Employees are working remotely or from home-country location 60% Situation has not yet occurred 31% Employees are taking a home leave trip 12% Employees are taking vacation 9% Employees are taking unpaid time off 3% Company is not tracking these occurrences 3% Other (1) 8% (1) Emergency leave; limited pay leave; covering expenses for a specified time period; temporary new assignment. 8a. If an expatriate chooses to stay, or if no evacuations are planned, which of the following are provided? (More than one answer could be selected.) In northeastern In other areas In Tokyo Japan of Japan N= Nothing extra is provided 70% 75% 76% Increased cost-of-living differential 6% 2% 1% Special allowance to cover price spikes due to shortages 6% 6% 6% Increased number of home leave trips 5% 4% 4% Increased hardship premium 4% 4% 4% Increased number of rest and recreation trips 2% 0% 1% Increased housing allowance 0% 0% 0% Other (1) 8% 10% 7% (1) Relocation to other parts of Japan; at the discretion of business unit president; housing repairs and member care visits; to be determined; financial aid Mercer LLC. 10

12 8b. If providing any of the items in question 8a, please explain in more detail. All employees receive additional payments to cover expenses. Allowed one of our employees to take two weeks vacation, and two others to take their annual home leave now. Anticipate an update to the hardship situation for Japan once the nuclear situation is abated, and if not, no later than end of March. For other benefits provided, our Business Unit Presidents are given discretion over appropriate assistance beyond hardship and environmental allowances that are expected to change as a result of the recent disasters. Check the situation in the coming weeks to see, when the expats will return most probably without their families in the first place. We will also check Col and QOLsituation to use the usual measures, before we come to new solutions Cover any additional costs that are due to the situation in Japan. We are also looking at getting work visas for them in Hong Kong and/or China, so we would pay for that as well. That would help them to continue to work. Evacuate for medical-related issues (for example, radiation sickness). Evaluating the outcome of research into this and will be adjusting accordingly. If expatriate chooses to stay in Japan, company will pay for their travel and temporary living in other location in Japan that are not affected. Likely do something, but do not have a plan yet. We have business travelers who will need to go in country to support our local operations. Additional comp hasn t yet been determined. Look to the mental health of our employees so we may provide what we call Member Care with a councilor in individual and group settings helping people deal with their emotions. Cost of these kinds of gatherings is covered by our mission. Money has been made available. Will figure out afterwards how they re-pay. Monitoring the situation currently; should the situation deteriorate, we have a plan in place to provide for voluntary relocation of all employees (expat and nationals) to an alternative location where they and their families can reside until we determine appropriate next steps. They may bring their family members/dependents and all will be covered by the company (room, meals, etc.) and they will be paid during this time, whether they are able to work or not. No decisions have been made in this regard. Paid leave for evacuation, costs for temporary accommodation and transport are taken over. Possible increase in goods and services allowance. Provide per-diem allowance for them staying in hotel in case evacuations is required. Since we do not have a policy that deals with this type of disaster, I cannot say for sure but we would adjust for pricing increases for sure and then depending on how the situation plays out possibly money for hardship or hazard pay Mercer LLC. 11

13 9a. If evacuating, to what location are you evacuating expatriates and/or their families? (More than one answer could be selected.) Evacuating at company s Evacuating at company s Evacuating at request due to threat request due to tsunami employee s of radiation or earthquake damage request N= Home country 39% 34% 44% Singapore 22% 20% 16% Hong Kong 14% 13% 12% Southern Japan 13% 16% 11% Philippines 3% 5% 2% Other (1) 10% 13% 15% (1) Hawaii; Taiwan; Australia; South Korea; Shanghai; Malaysia; United Kingdom; United States. 9b. If you are returning expatriates to their home countries, are you also repatriating them? (More than one answer could be selected.) N=127 Yes 9% No, employee expected to work from home country until able to return 52% No 19% No, treating as home leave trip 17% No, treating as vacation 9% No, treating as other (1) 9% (1) Emergency leave; work travel; limited paid leave; business trip; depends on situation. 9c. If you are returning expatriates to their home countries, which of the following allowances are you providing to them? (More than one answer could be selected.) N=117 Airfare 86% Accommodations 48% Transportation costs (e.g., car rental, public transportation) 47% Meals 32% Miscellaneous 16% None 13% 2011 Mercer LLC. 12

14 9d. If paying local expenses in the home country, how is the amount calculated? N=79 Actual expenses 65% Per diem 18% Other (1) 18% (1) Pay will continue and will be reviewed after 1 month; vendor to provide under the temporary living policy; still receiving goods & services differential in Japan; depends on terms of contract and duration in home country; actual expenses if no possibility of housing; long term housing; per diem but only if no accommodations in home country; depends on job level; company preferred housing and per diem; to be determined. 10. If evacuating, how are evacuation expenses handled? Evacuation at Evacuation at company s employee s request request N= Company covers all related expenses 81% 72% Company covers related expenses up to a time maximum (1) 10% 10% Company covers related expenses up to a monetary limit (2) 1% 7% Other (3) 7% 11% (1) Up to 3 weeks; 60 days, 30 days; 14 days (mode); 10 days; standard home leave. (2) Actual; per diem depends on home country. (3) Per policy; to be determined. 11. Which of the following are you treating as evacuation expenses? (More than one answer could be selected.) N=126 Airfare 98% Accommodations 77% Transportation costs (e.g., car rental, public transportation) 68% Meals 54% Miscellaneous 22% 2011 Mercer LLC. 13

15 12. If evacuating, how are expatriate-related allowances handled? Evacuation at company s request N= Evacuation at employee s request All allowances continued without interruption 66% 65% All allowances continued up to a maximum number of days and then situation reviewed (1) 13% 14% Some allowances are continued while others are suspended (2) 8% 8% All allowances suspended for period of evacuation 11% 7% Other (3) 3% 6% (1) 14 days; 30 days (mode); 60 days; 90 days; up to 6 weeks; up to 16 weeks. (2) COLA and hardship; COLA; housing allowance continues unless repatriated; housing, utility, transportation continue while G&S differential discontinues. (3) Standard home leave; to be determined. 13. If evacuating, how are you handling dependant education? (More than one answer could be selected.) Evacuation at Evacuation at company s employee s request request N= Enrolled in home-country schooling if applicable 35% 33% Special allowance provided for private tutoring 10% 6% Other (1) 10% 14% No special attention being paid 44% 47% (1) To be determined; case-by-case. 14. If evacuating, for how long are expatriates evacuated? As a result of As a result of earthquake/tsunami possible radiation devastation contamination N= As long as required with no maximum 71% 71% Up to a maximum number of days (1) 5% 5% Up to a maximum number of days and then situation reviewed (2) 10% 9% Other (3) 14% 15% (1) 7 days; up to 10 days; 14 days, 30 days (mode); 90 days (mode); discussed with expatriate. (2) 10 days, 14 days (mode), 30 days, 60 days, 6 weeks, continually reviewed. (3) To be determined; as long as threat continues; based on contract provisions Mercer LLC. 14

16 15. How does your company determine whether an expatriate can return? (More than one answer could be selected.) N=155 Based on safety recommendations from respective home country authorities 65% Based on safety recommendations from internal company department 63% Based on safety recommendations from external security consultants 48% Other (1) 19% (1) Individual s decision; local authorities; HR discretion; not yet determined; evaluation of severity; other company practices. 16. If an expatriate s job function is no longer relevant in the wake of clean-up efforts, how will your company handle the situation? (More than one answer could be selected.) N=151 Company repatriates to the home country 39% Company proposes new assignment 18% Company finds a new position in Japan 6% Other (1) 2% Situation has not yet occurred 61% (1) Depends on individual. 17. Before the tsunami and earthquake, Japan was not a typical hardship location. If a recommendation is made to institute a hardship premium in Japan, would your company provide such a premium to expatriates who return to Japan? (More than one answer could be selected.) N=155 Yes, if a recommendation is made by a data provider 49% Yes, if a recommendation is made by management 27% Yes, if a recommendation is made by the home-country government 10% Yes, other (1) 5% No 28% (1) Not yet determined; possibly; local management decision. 18. If employee housing was destroyed in the earthquake, is your company providing anything above and beyond what would be provided by the Japanese government or if applicable, by insurance companies? N=114 Yes (1) 30% No 70% (1) Interim housing; self-insurance policy; depends on sufficiency of reimbursement; new company paid housing; employee contribution fund directed to affected employees; loans; disaster allowance; lost item reimbursement; to be determined; 2011 Mercer LLC. 15

17 19. Please share your comments on how your company is handling Japanese nationals. We received many responses related to how multinational companies are handling Japanese nationals. We will present those responses in our next survey click here to participate. 20. Please share any additional comments you may have on the situation in Japan and how your company is responding to it. Aim is to help as much as possible. All of our expatriates are in Tokyo, for which evacuations have not been warranted. However, we have had a voluntary evacuation for the family of one expatriate, which we are treating as an additional home leave. In areas where the power supply has been restricted, working hours have been adjusted as needed. The company has also been sending supplies to local employees in affected areas in northern Japan. Assess the situation from a number of perspectives: local/regional/global media coverage; US State Dept advisories; expat home country state dept advisories; host country advisories; local/regional/global strategic security; third party disaster experts; our own local/regional personnel. Because [we] cannot legally direct funds to assist impacted employees, the company has initially set aside a special fund of $100,000 (U.S.) to assist affected employees and their families. Individual employees may also make donations to directly assist affected employees in Japan. Monetary donations to the Employee Disaster Relief Fund can be made through 29 April ASSISTING IN BROADER RELIEF EFFORTS. [We] are committing $1 million to support near- and long-term relief efforts. This support will come in three ways: (1) Direct grants to organizations aiding in the relief effort or the rebuilding of healthcare infrastructure. [Our] staff is currently assessing these opportunities and will designate the recipients of these grants in the days and weeks ahead as we better understand the needs of Japan. (2) Matching grants for employee donations to non-profit organizations and to [a corporate] fund for employees affected by the disaster, up to $250,000 (U.S.). (3) Product donations. Close contact with Japan counterpart on a daily basis to be updated on the situation. Company has given a donation to the relief effort in Japan. Company is working with outside agencies and EHS and HR leaders in the region to monitor situation. We do not have expatriates in Japan, only employees. So far no employees have been impacted. We have had concern expressed by expats in nearby countries. Company overall doesn t apply mandatory evacuation plan for expats; however if individuals elect to exit Japan, company would provide all means to support. Consulted with local nuclear power plant engineer for information concerning radiation issues and danger to our people, risk mitigation and potential scenarios. Contacted the local employees in Tokyo and ensured that they are safe. For those travelling to the area, we are keeping contact (via own department). All employees are informed of what to do via intranet Mercer LLC. 16

18 Corporate gift to various charities supporting the region as well as offering company match up to a certain amount for contributions made to these charities. Countering a growing suspicion amongst nationals that they are not hearing the truth from the government, and that employers may not be assertive enough to determine what are adequate protective measures, in relation to nuclear emissions risk etc. Despite assuring that the company will respond to [local] authorities advice for any critical incident, there appears an expectation that a foreign company would have a policy in place, over and above emergency management organizations authority within a community. Crisis Team who meets 2-3 times a week in order to clarify on the current situation in Japan (incl. Japanese colleagues). Difficulties for Japanese management to accept expatriates decision to leave their job so quickly. Direct support (e.g. with goods) is not easy as Japanese people hardly admit that they need external items/support at all. There is a strong belief by Japanese employees in their government and their information/overview. Being located mainly in Tokyo, these employees feel very fortunate not to be hit by the tsunami and do their best to keep calm. Our company handles the situation well in general, [but] could be more structured. Personally, I believe, the official opinion in our company was made rather quickly, that the [local] press is overreacting and that the situation in Tokyo/Fukushima is under control. Now that the press turns to Libya and other issues, it will be hard to change this opinion, if the situation should become worse. Encouraging donations and matching local employee donations. Keeping in regular contact with senior management to monitor the situation. Getting information about what actually was happening was, understandably, a challenge in the early days. We ve made a donation to disaster relief and are matching employee contributions up to USD 500,000. Given our expats the choice to temporarily evacuate to home country. Had two business travelers in Nagoya at the time of the earthquake. Business travelers are not recorded centrally, so we were required to ask around the business to see if anyone was aware of this type of visitor. Luckily these employees were identified and repatriated; however [that was the result of] more luck than planning... Have one expatriate who is assigned to the US Air Base in Okinawa. He is assisting the US military with relief efforts. We are looking for advice on what additional premiums we should provide for him, if any. Heavily involved in humanitarian efforts as well working on our own issues. Expat families were relocated to home country, but the expats themselves are heavily involved in the clean-up and other initiatives. Holding daily meetings on the developments in Japan. If expats or their families wish to leave Tokyo, we will support them. Some have left, some have stayed (so far). There s been a reluctance to just pull out the expats and potentially create panic amongst local employees. Daily calls are being held between 2011 Mercer LLC. 17

19 the General Managers of the different business in Japan plus the relevant HR Heads. Our Global Security Director is monitoring situation closely, but local management teams/hr are ultimately making the decisions. In general, management allowed expatriate employees to decide if they needed to leave. All left due to radiation concerns early on as radiation threat started. While there was not a mandatory evacuation in effect when they left, I would imagine that there would have been a mandatory evacuation by now with the rising risks and concerns over radiation. It has been our priority to handle the expats like the locals. Information is specifically sent out to them stating this and if they have concerns, they should address them with local management (some of them also being expatriated). Keep in contact with the employees. If required, company will give them a lump sum to purchase their household equipment (rice cooker, utensils etc.) which were destroyed in the earthquakes. Allow employees to work from home. Listening to our employees and outside advisors and meeting daily to review the situation. Making a large donation. Many questions were not answered because we are not there yet in the situation. Monitoring day to day and creating policy as the need arises. The most important thing is the safety of our employees. We are relying on our colleagues in Japan to provide guidance. Most complications in business resulting from supplier issues related to tsunami/ nuclear issues. Employee population is OK & operations will resume within 1-2 weeks. One expat in Tokyo, who ironically had a planned vacation in Hawaii one week after disaster. They would not be hesitating to return from vacation were it not for the nuclear situation. Our company fortunately does not have any expatriates in Japan. However, [we were] provided with the information below on how another company responded to the situation with some of their expats and wanted to pass it along. Not sure how they coordinated all of this, but an obvious outstanding response. The location of the company is 125 miles from the nuclear plant. Company communicated within a matter of hours to all of their expats letting them know that they had three hours to collect personal belongings and that their families needed to be ready to leave at that time. All 25 expat families were picked up at their homes in Japan by a charter bus and driven six hours to Tokyo. When they arrived at the airport the company had already provided the authorities with all of the necessary legal documentation to allow them to board the plane and the expats and their families were escorted onto a private charter plane direct to Chicago and connecting to Columbus. When the families arrived in Columbus, each one was provided with a rental car and a rental house. When the employees arrived in the rental houses, they were surprised to find fully stocked refrigerators, linens, towels, etc. It sounds like the amount of loyalty built by the high-touch emergency response plan is having a big positive impact on employee engagement over there Mercer LLC. 18

20 Providing international medical coverage to the locals impacted. Safety of our employees is number 1. Set up our own charity giving website so that all of our staff from around the world can make a donation to our chosen charity The Red Cross. Then our company is going to match the total donations received. The expatriate general manager has decided to stay in Tokyo despite the threat in order to control the situation and to keep solidarity with local employees. Though there is no critical damage at the factories, there are some facilities or equipment damaged, and earthquake aftershocks have been following. Therefore, we always keep the words safety first in our mind, when we take actions for recovery. When restarting the production, truck and bus tires (TBR) will be the first priority, taking into consideration that they are the commercial products required for the recovery of the devastated areas. We will cooperate with rolling blackouts appropriately. At the same time, we will endeavor to minimize the impact of the blackouts through the full utilization of co-generation systems which are installed at each factory. We have taken steps to cope with the brownout to relieve the shortage of electricity: To reduce activities inside the head office buildings, technical center etc. To save using the lightings inside the head office building, technical center etc. To minimize using elevators inside the head office building, technical center etc. To share using the office equipment and to turn off the power when not using To stop illumination of corporate signboard under the territory of Tokyo Electric Power Company (4 signboards in total) To close Bridgestone Today (Corporate Museum) tentatively (until March 31) To stop illumination of the communication space (Head office building 1st floor) To stop using IT system inside the office (Executed on March 14) Very concerned. Monitoring situation. Rolling blackouts and transportation challenges continue, and are impacting hours of operation, availability of parts and supplies, etc. We have established a Japan Disaster Relief Fund and are matching employees contributions to the fund. our CEO sent a personal note of support to all Japanese employees. We allowed a special additional home leave trip to all assignees and dependents in any areas from Nagoya and north Mercer LLC. 19

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