Japan quake strains supply chain

Plant closures are threatening supplies to global manufacturers of items ranging from semiconductors to car parts.

    Toyota has halted operations at 12 main assembly plants, which will result in lost production of 140,000 vehicles [AFP]

    Global companies from semiconductor makers to shipbuilders faced disruptions to operations after the earthquake and tsunami in Japan destroyed vital infrastructure and knocked out factories supplying everything from high-tech components to steel.

    Top mobile telecom equipment makers have joined automakers in warning of a damaging supply squeeze as the impact of Japan's devastating earthquake spreads, adding to fears in a sector hampered by shortages.

    Japan, home to around a fifth of the world's semiconductor production, has seen factories making everything from chips to car parts shutdown following March 11 9.0-magnitude earthquake, threatening supplies to manufacturers across the globe.

    Most are putting contingency plans in place, scrambling to source key components elsewhere while working out how much inventory they have available to keep production going.

    Japanese companies are not only reeling from damage to factories and suppliers in quake-hit northeastern Japan but also suffering from fuel shortages nationwide and power outages in the Tokyo area that are affecting production, distribution and the ability of staff to reach workplaces.

    The following is a roundup of the impact of this month's earthquake and tsunami on Japanese manufacturers of cars and electronics:

    Auto makers:

    Toyota Motor Co - has halted operations at its 12 main assembly plants in Japan until at least Saturday, which will result in lost production of 140,000 vehicles. It will also delay the launch of the Prius wagon and minivan models in Japan from the original plan for the end of April. On Monday the firm began making car parts at plants near its base in Toyota City, central Japan, for overseas assembly facilities. It resumed making parts for service centres to repair vehicles already on the road last week.

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    Honda Motor Co - has extended its production halt in Japan to March 27. On Monday, Honda said one-fifth of its Japan-based Tier 1 suppliers affected by the earthquake had said it would take more than a week to recover. Honda made 69,170 cars in January in Japan, accounting for around a quarter of its production.

    Mazda Motor Corp - has not set a time for resumption of full-scale production at its Hiroshima and Yamaguchi plants, but resumed limited operations on Tuesday to produce vehicle repair parts, vehicle parts to be shipped to overseas plants and semi-finished goods.

    Suzuki Motor Corp - said its three car assembly factories in Japan will remain closed on Thursday and Friday, but the firm will operate an engine factory on those two days using parts in inventory. The firm has not decided on production plans for next week and beyond.

    Fuji Heavy Industries Co - said all five of the car and parts-related plants for its Subaru-brand vehicles in Gunma prefecture, north of Tokyo, will be shut at least until Thursday. Production of vehicle parts to be shipped to overseas manufacturing plants started on Wednesday and production of vehicle repair parts is scheduled to start on Thursday.

    Electronics makers:

    Sony Corp - said shortages of parts and raw materials would force it to suspend or reduce production at five plants in central and southern Japan making digital cameras, camera lenses, flat-screen televisions and other goods. Another plant may be affected by rolling power blackouts. Six production sites in northern Japan have been halted since the quake. If shortages continue, Sony may consider temporarily shifting some production overseas.

    Japanese companies reeling from damage to factories and suppliers in quake-hit northeastern Japan [AFP]

    Toshiba - said output was suspended at a factory in Iwate prefecture making system LSI chips for microprocessors and image sensors. On March 28, the company said it will power up production lines at the plant, but has not yet decided when it will restart production. An assembly line at a plant making small liquid crystal displays for smartphones and other devices will be closed for a month to repair damaged machinery.

    Canon - said all of its domestic camera production  remains suspended, citing difficulty obtaining parts, and it does not yet know when output will resume.

    NEC - said it restarted production on Wednesday at all its four quake-hit plants in northeastern Japan, which include factories making communications equipment, routers and switches.

    Nikon Corp - said it expects to resume production at all its north Japan plants, including those making optical pickups and other electronic parts, digital cameras and audio equipment, by the end of March. The company warned, however, that power cuts and parts shortages could make a return to full production levels difficult and said it may not be able to fulfill all its customers' needs.

    Panasonic - said it restarted a factory making printed circuit board materials in Koriyama, northeast Japan on Wednesday. Several other factories in the region remain closed, however, including one in Fukushima making digital cameras and audio equipment, and one in Sendai assembling optical pick-ups. The firm declined to give details about the other affected plants.

    Renesas Electronics - the world's No.5 chipmaker, said operations at three of its 22 factories in Japan remained suspended, after restarting four since March 19. The company added, however, that power cuts make it difficult to resume operations at some plants and unable to a return to full production levels at others.
    Others include:

    Shin-Etsu Chemical - the world's leading maker of silicon wafers, said two of its plants near the worst-hit areas remained offline and it is unsure when it will restart operations. Some of the wafers made in Japan are shipped to chip companies overseas. Shin-Etsu is trying to boost production elsewhere, particularly of 300-mm wafers, to make up the shortfall.

    Jamco - a Japanese company making galleys for the Boeing 787 Dreamliner, said delivery could be delayed if oil products continue to be scarce.

    SOURCE: Agencies


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