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Job Cuts Highlight Japan's Business Week

Japanese electronics maker Toshiba has unveiled plans to eliminate about 18,000 jobs while two leading makers of Japanese motorcycles are teaming up to reduce costs.

Toshiba, Japan's largest maker of computer chips, announced a comprehensive restructuring plan, a strategy designed to cut costs as global demand for electronics continues to drop.

Toshiba will cut its workforce by about 10 percent, or 18,000 jobs. The company also plans to close six of its 21 Japanese production plants.

Toshiba rivals Fujitsu and NEC have also recently announced restructuring plans which include significant job cuts.

For many economists, it came as no surprise Tuesday when the Japanese government said that the unemployment rate reached five percent in July, a post-war high.

Ron Bevacqua is chief economist for Commerz Securities in Tokyo. "Jobs are disappearing because Japan still has a situation of misallocation of resources," he says. "The wrong industries have been built up. They are either no longer competitive or otherwise obsolete. Japan has too many steel factories and construction companies relative to what the real demand actually is. We are going through the phase where those excesses are going to be reduced."

Analysts widely expect Japan's jobless rate to continue to climb as more companies slim down or close.

There is fresh evidence that some foreign firms operating in Japan are also shedding workers. U.S. computer marker Gateway announced that it will pull out of Asia to reverse huge losses stemming from a glut in personal computer sales. More than half of Gateway's regional job cuts will be in Japan, where the company had a large showroom.

In Japan's motorcycle industry, two major manufacturers are rethinking their strategies amid declining sales. Suzuki Motor and Kawasaki will start developing and producing motorcycles together and sell them under both brand names. Suzuki's Chairman Osamu Suzuki says that while demand for the bikes is slipping domestically, it remains strong overseas.

Finally, a consortium of American and Japanese telecommunications companies has launched a billion dollar undersea cable network connecting their two nations.

The 13,000 mile fiber optic network offers high-speed data access and can accommodate 13 million voice calls at once. Worldcom, Japan Telecom, Sprint and more than 40 other firms are taking part in the venture.