Nova Union of Staff and Teachers Press Conference

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Yesterday was, without a doubt, a media triumph for Nambu, and our struggle for job security for members.

We’ve been trying for so long for this kind of media exposure, and the current Nova news frenzy gave us our opportuniy to make the public aware not only of the working conditions in Nova, but also in the whole of the eikaiwa industry, and in the job market in Japan.

At the news conference yesterday at the Ministry of Health, Labour and Welfare, TV crews from 8 different broadcasters attended, along with numerous journalists. We spoke about the current Nova dispute and about the common problems of foreign workers in Japan.

To Nova, in its current crises, we publically announced the offer of an olive branch, a special peace proposal, to help with the situation: a cessation for now of strike action, in exchange for guaranteed renewal of contracts when requested by teachers.

Following the press conference, a Nambu Nova branch delegation, with the President, the Vice-president, General Secretary, and the Kubikiri-usagi Nova Bunny, tailed by a Fuji TV crew, went to Nova’s Tokyo HQ in Shinjuku. The intention was to deliver the union’s special peace proposal for the dispute to tpge company’s Tokyo head office.

The TV crew were blocked at the door! Nova management refused to come out and talk. No surprises, huh?

However, the company’s behaviour was worse than that: after the union delegation agreed to meet Nova management without the media present, the manager in charge, Robert Vaughan hid and told his staff to say he’d gone home, even though three members of the delegation had seen him in the corridor.

Robert, don’t be afraid. We’re not carrying guns.

The delegation, having drunk tea, but insulted by Vaughan’s declining to come to meet them to accept their proposal, had no alternative than to go tell the waiting TV crew what had happened.

Troubled Nova staff slams work conditions

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Nova Corp. teachers and other employees in Tokyo criticized the company Tuesday, saying the troubled chain of foreign-language schools must improve its business not just so it becomes more honest with customers but also for the sake of its workers.

At a news conference, Nova union members also demanded that the firm provide better working conditions for the Osaka-based chain’s roughly 5,000 teachers at its branches nationwide. Although teaching English is Nova’s mainstay, it also offers lessons in other foreign languages.

The rank and file said Nova must improve its thorny relations with its union if the chain hopes to survive the current crisis, in which it was slapped with a six-month ban on offering new long-term student contracts.

“A couple of months ago, (Nova President Nozomu) Sahashi issued a statement asking all the teachers to be friendly with their students and greet them with big smiles,” said Thomas Reichl, the union president, who has been teaching German for 13 years. “We say to Mr. Sahashi, please lead by example and give us something to smile about.”

The union has been fighting Nova for three years to secure a stable work environment in which its teachers can have indefinite or long-term employment agreements instead of annual renewals, and to allow teachers to qualify for social security insurance.

According to the union, negotiations with Nova began in 2004, but when the talks failed to produce results it began organizing strikes and protests the following year. In 2006, the union took its case to the Tokyo Labor Relations Board.

As the largest language school chain in Japan, Nova’s practices effectively set the industry standard, the union said, adding that improved conditions would benefit the entire sector.

Last week, the Ministry of Economy, Trade and Industry imposed a six-month ban on new customer contracts with more than a one-year duration, or more than 70 hours of lessons, because the company engaged in deceptive business practices that affected many of its students.

The violations included distributing pamphlets claiming students, after they sign their lesson contract, can schedule classes at any time or branch, when in fact there was a shortage of teachers at times of peak demand.

Branches were also allegedly reneging on contract cooling-off period reimbursements.

Reichl said the teacher shortage stems from high turnover. Nova teachers who are recruited overseas only stay around eight months because they become disillusioned with their jobs, he said, adding this results in poor teaching standards.

Briton Robert Tench, an English teacher and union treasurer, described the complaints he has received from students.

“I walked in and said ‘Long time no see,’ and then the student said she was not able to reserve any class,” he said.

Tench said the firm may be deliberately keeping teacher numbers low to cut payroll corners.

http://search.japantimes.co.jp/cgi-bin/nn20070620a3.html

A lesson for Nova Corp.

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The Ministry of Economy, Trade and Industry has decided that Nova Corp., the nation’s largest English-language school chain, violated the Specified Commercial Transaction Law and ordered it to partially suspend business. Saying that Nova committed 18 types of violations, the ministry imposed a six-month ban on new contracts of more than one year or more than 70 hours of lessons with customers. It is of grave concern that the school chain as a whole was involved in the irregularities. Top management must seriously reflect on what the firm did and change its business method.

The following are examples of Nova’s illegal business practices. It distributed pamphlets saying that students could book lessons at any time and at any Nova school, and had students sign contracts, when in fact it was difficult to keep the promise due to a shortage of teachers. It ran ads stating that the admission fee was exempted “only for now” when the fee had always been exempted. When students canceled contracts, Nova refunded smaller than promised amounts or deducted an amount equivalent to the admission fee, despite the fact that the fee had been exempted.

Nova also misled some people to believe that their contract “cooling-off” period had expired and prevented them from canceling their contracts. The Nova headquarters distributed manuals on how to deal with complaints about contracts to Nova offices across the country. But the manuals taught illegal ways of dealing with such complaints.

Behind the illegal business practices seems to be Nova’s aggressive policy to expand the number of its schools to 1,000. It now has just over 900 schools. Nova has about 450,000 students, more than 60 percent of the nation’s English-language school students. Its sales are expected to account for about half the industry’s total sales. Suffering a loss in two consecutive years, Nova had a consolidate loss of 2.4 billion yen in the business year that ended in March. The punishment meted out by METI may frustrate Nova’s plan to go into the black in the current business year. If so, it would only be reaping what it sowed.

http://search.japantimes.co.jp/cgi-bin/ed20070619a2.html

Scandals taint private sector / Comsn, Nova wrongdoing shows government’s oversight role vital

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The Economy, Trade and Industry Ministry on June 13 prohibited Nova Corp., which operates English conversation schools nationwide, from offering new contracts to students lasting longer than a year for the next six months.

The ministry also will terminate, in the case of Nova, a subsidy to individuals that helps people acquire job skills, which Nova students could obtain to cover part of their tuition fees. From June 20, Nova students will no longer be eligible for the state subsidy.

Both measures effectively block the two companies’ main source of revenue and are very strict–no different from demanding that the two firms withdraw from business.

http://www.yomiuri.co.jp/dy/business/20070619TDY04003.htm

Nova Corp. eyes capital tie-up

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[According to industry sources] the nation’s largest English language school chain is leaning toward a capital alliance as a way to improve its creditworthiness and secure operating expenses.

[Nova] posted a net loss of 3 billion yen in fiscal 2005 and another net loss of 2.4 billion yen in fiscal 2006 as its expansion policy backfired. The number of students fell to 418,000 as of the end of March, down 12.1 percent from a year earlier.


http://www.asahi.com/english/Herald-asahi/TKY200706180093.html

Nova president eyes issuing new shares

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LOOKING TO DISPEL MARKET CONCERNS 

Nova Corp. is considering issuing new shares to strengthen its capital and dispel market concerns that its business could worsen in the wake of the government’s order to suspend part of its operations, President Nozomu Sahashi said.

Although the details have yet to be worked out, the embattled English-language school operator thinks tapping external capital is a “measure toward a next step,” Sahashi said Friday in his first interview after the business suspension order was imposed by the Ministry of Economy, Trade and Industry.

He dismissed the possibility of capital or operational tieups with rival language schools, saying, “We cannot expect a synergy.”

However, he did refer to the possibility of concluding alliances with companies in other industries.

On prospects for the current business year through next March, Sahashi said Nova will have a tough time in the first half but will see some improvement in the second half. “It is possible that we could return to profitability,” he said. 

The company booked a net loss of 2.50 billion yen for the year through March 31.

Following the order byMETI, Nova suspended part of its business Thursday for six months.

The ministry said many Nova students were unable to take lessons at a school or time of their choosing in contradiction to Nova telling potential customers they could book language lessons “anytime and anywhere.”

Nova’s management “must take responsibility,” Sahashi said, indicating the company will impose disciplinary measures on executives, including himself, in the future.

He also said Nova will set up an internal inquiry panel.

Nova is Japan’s biggest English-language school. Headquartered in Osaka, it has about 480,000 students.

It violated a law designed to protect consumers in fields such as education, beauty services and arranged marriages, METI said.

Subsidies to end

The welfare ministry said Nova Corp.’s English-language courses will no longer qualify for government subsidies designed to support educational opportunities because the company lied to consumers.

The Health, Labor and Welfare Ministry said the subsidies will no longer be given starting Wednesday. This will be a major blow to the English-language school operator.

The government provides subsidies for people engaged in educational training authorized by the welfare ministry to improve the abilities of the unemployed and other people.

The welfare ministry approved 32 Nova courses for the subsidies in 1999. In fiscal 2006, about 4,700 people received a total of 560 million yen in subsidies.

Since 1999, around 71,000 Nova students have received a total of about 16.1 billion yen.

http://search.japantimes.co.jp/cgi-bin/nn20070617a3.html

Nova boss weighs assistance options

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Several companies in various industries, including retail firms, have offered capital and business alliances to Nova Corp., the nation’s largest English language school chain, Nova President Nozomu Sahashi said in an interview with The Yomiuri Shimbun Friday.Sahashi said Nova, which was ordered by the Economy, Trade and Industry Ministry to suspend part of its operations following the discovery of violations of the Specified Commercial Transaction Law, was considering all offers. “We are considering the offers because trust in us has to be restored,” he said.

Nova has reportedly seen its sales drop sharply following the ministry’s order, which limits the number of new contracts the company can receive. One option the company is considering to meet financial demands is selling off properties and real estate in Osaka estimated to be worth several billion yen.

Concern is growing among Nova students because the company was ordered Wednesday to suspend recruitment of customers for long-term contracts. It was also decided Friday that the company would be excluded from governmental benefits for education programs, as of Wednesday.

“I’m uncertain as whether we’ll be able [to regain the public’s trust] through our efforts alone,” Sahashi said. “If we get a good business partner, we may be able [to regain trust] earlier.”

Though Sahashi admitted that several firms in various industries had offered to form partnerships with Nova, he rejected the possibility of a business affiliation with another English school. “Other English conversation schools wouldn’t help us to regain the public trust, and we couldn’t expect any benefits from such a partnership, either,” Sahashi said. “I don’t want to tie up with a fellow trader.”

The president was upbeat regarding Nova’s finances, which are expected to drop due to a lack of new student contracts and the likely cancellation of current ones. “There’s no problem, and we don’t need the support of finance organizations, either,” Sahashi said.

Since Nova was inspected by the ministry and the Tokyo metropolitan government in February over its violation of the law, several firms have approached the company with offers of business alliances.

According to one source, a large retailer had discussed a possible business affiliation with Nova through a fund, but gave up on the plan because the two companies could not agree on the conditions. Another retailer, however, reportedly is still interested in a business alliance.

While Nova grew rapidly because of its “ekimae ryugaku” model of operating schools near stations, the firm was in the red in its consolidated account for fiscal 2005 and 2006, affected by a reduction of central government benefits for educational programs.

http://www.yomiuri.co.jp/dy/business/20070616TDY01003.htm

Nova suspension order

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This is the first time that an English conversation school has been so harshly disciplined. However, it is a natural reflection of the shoddy way in which Nova has run its business–namely, engaging in a systematic deceit with the signing and canceling of course contracts. A detailed check of the management reveals 18 different rule violations. They include exaggerated ad copy, explanations contrary to the facts, refusing or delaying refund payments from canceled contracts and failure to disclose key matters, among other things.

The illegal practices stem from structural flaws inherent in the company’s overaggressive business expansion plan.

http://www.asahi.com/english/Herald-asahi/TKY200706160085.html