March 14, 2011 12:46
The massive earthquake that hit the northeastern region of Japan on Friday dealt a hard blow to almost all the country's industries from manufacturing to logistics.
Not only did an explosion at a nuclear power plant result in disruption to electricity supply but ports, roads and railways in the northeast also sustained heavy damage.
The manufacturing industry may suffer worse-than-expected losses as many companies have making increasing investment in the Miyagi Prefecture, which was hardest hit by the disaster. Taking advantage of cheaper labor than in centers like Tokyo and Osaka and closer proximity to the mainland, Toyota has been building dozens of key parts plants as well as car assembly plants, and other manufacturers have been increasing investment in port facilities that will help save logistics costs.
Damage in Miyagi could therefore seriously affect the Japanese manufacturing industry, even if the region itself accounts for a mere 2 percent of Japan's GDP.
◆ Disruption in Manufacturing
The automobile, steel, electronics, semiconductor, and petrochemical industries are suffering especially huge damage.
Toyota, Honda, Nissan and Japan's nine smaller automakers have suspended operations at all their plants on Monday. Two Toyota plants in Iwate and Miyagi prefectures were directly hit by the quake last Friday. They were producing 420,000 cars per year, accounting for 13 percent of the automaker's annual domestic production of 3.2 million.
Electronics giant Sony suspended operations at six plants, and two semiconductor makers, Renesas Electronics and Toshiba, suspended their plants in Aomori and Iwate prefectures. Electronic component maker TDK halted operations at 13 plants. Since they supply components for mobile phones to Apple and Samsung Electronics, the suspension could disrupt supply for electronics firms worldwide.
Japan's largest oil refinery JX Nippon Oil shut plants in Sendai, Miyagi and Kashima, Ibaraki, and Mitsubishi Chemical and Mitsui Chemicals closed plants in Ibaraki. A massive fire broke out at Cosmo Oil's refinery in Ichihara, Chiba.
Pacific Metals, the largest Japanese producer of ferronickel, a raw material for stainless steel, stopped all operations. This too could cause a chain reaction.
◆ Logistics Chaos
The damage caused to industrial infrastructure including electrical grids, roads, and ports is another serious problem. Experts speculate that Japan could suffer from economic damage for a protracted period.
Tokyo Electric Power announced a plan for planned power outages for each region by rotation starting Monday, the first time since the company's foundation in 1951. Railways and roads even on the outer fringes of Tokyo have been damaged.
Even if plants are repaired, it will take considerable time to ensure timely supplies of raw materials, parts and equipment.
The entire port of Kesennuma in Miyagi was burned to the ground, and facilities were partly destroyed at Soma, Haramachi, and Onahama ports in Fukushima Prefecture as boats collided with each other.
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