Shortage Of Japanese Products Set To Hit OZ In Q3
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Citigroup, Analysts in Tokyo are forecasting that markets like Australia, The US and Europe could face critical shortages of products made by Japanese companies, late in the second or third quarter with a major lack of supply running into the key 4th quarter.

Currently Japan accounts for 14 percent of the global production of computers, consumer electronics and communications gear last year, according to iSuppli who now predict that Chinese and Korean companies will start ramping up production in an effort to strip market share away from Japanese companies.

The only hope for some Japanese companies is the availability of components outside of Japan that can be delivered to manufacturing operations outside of Japan say analysts. 

Japan, which is home to around a fifth of the world’s semiconductor production, has seen factories making everything from chips to car parts closed following the recent earthquake.

“News that the earthquake has disrupted the supply chain for production bases in Kyushu, a long way from the Tohoku region, will probably come as a bit of a surprise, but this shows the potential for similar disruption at other companies,” Citigroup analyst Masahiro Shibano said.

Set to be hit hard are coompanies like Sony whose shares dropped 17% during the past two days but are now clawing back lost ground. Also set to be hit by a lack of power for their plants and disruptions to transport systems is the likes of Canon, Mitsubishi, Toshiba, Pioneer, Panasonic and Nikon.

Reconstruction of infrastructure from roads to rail, power and ports in the affected regions in Japan will take at least five years, experts said this week.

7 Sony plants and two research and development centres have suspended operations after the quake in a move that is set to have a major impact on the supply of Blu ray technology to several vendors around the world.

In Tokyo, transport woes have hampered operations at Sony where only 120 of its 6,000 staff turned up for work yesterday at their main Tokyo office building, due to rail service disruptions.

A Sony spokeswoman said the company was inspecting some facilities to see when production might be resumed, but was still not sure when this would be possible. One plant in Miyagi, making magnetic tape and Blu-ray disks was severely damaged by the tsunami.

Canon said it would suspend production at one of its main plants in Oita, southern Japan, blaming problems with parts supply and distribution.

Nikon said the suspension of its precision equipment plants in north Japan could eventually disrupt production at factories closer to the capital, which could run out of parts. The company’s factories in the Tokyo region may also be affected by the rolling power blackouts, expected to be in force the end of April.

The 9.0 earthquake and tsunami is also having a kick on effect to none Japanese brands with Smartphone maker Research In Motion confirming that they are exposed to Japanese suppliers. They say that they checking the impact of the quake on its manufacturing operations.

In a small sign of stability in the chip sector, spot prices of NAND-type flash memory, critical in Apple’s iPad and other mobile devices, dropped 3.8 percent on Wednesday after surging since the quake.
Toshiba, which supplies around a third of the world’s NAND, was inspecting its equipment after the disaster caused a brief shutdown at its facility in Yokkaichi.

The closure of Japanese car and parts plants could affect Australian carmakers in as little as two weeks and within four weeks distributors, who are selling Japanese made cars in Australia such as Mitsubishi who 2 years ago closed their Australian manufacturing operations in favour ofr fully imported vehicles from Japan. 

Japan is a key supplier to the global autos and technology sectors, making prolonged disruption a threat to both.

Analysts have said if the supply chain were broken for even a few weeks, the impact could be felt in higher prices or shortages of gadgets such as Apple’s iPad and other tablets, smartphones and computers for months to come.
Due to electricity shortage in Tokyo and the surrounding areas, Pioneer said, “it [has been] difficult to maintain regular business hours.  Additionally, public transportation in the area is not yet back to its normal operating level, affecting some employees’ ability to commute to and from their offices.”

Mitsubishi Electric said major business operations in the Tohoku region have sustained damage as a result of the earthquake.

At the Tohoku branch, located in Sendai, Miyagi prefecture, “there was some damage in the office.” At the Koriyama factory, located in Koriyama, Fukushima prefecture, some damage was reported and “production has temporarily ceased at this factory, which manufactures CCTVs and communications equipment. Upon confirming operational safety, Mitsubishi Electric will consider when to resume operations, while taking into account the impact of the earthquake on its manufacturing facilities.”

Alpine Electronics said that they are evaluating damage to its administrative offices and manufacturing plants there, and once the safety of the facilities is confirmed, operations will resume, it added.