Toyota Output Loss May Top 40,000 Vehicles on Power Shortages
By Terje Langeland - Mar 15, 2011 8:06 AM GMT+0700
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Business ExchangeBuzz up!DiggPrint Email . Toyota's stock fell 7.9 percent, the most since December 2008, to close at 3,310 yen in Tokly trading. Photographer: Tomohiro Ohsumi/Bloomberg
Toyota Motor Corp. (7203), the world’s largest carmaker, may lose output of at least 40,000 vehicles after Japan’s strongest earthquake damaged factories and crippled nuclear power plants, causing electricity shortages.
Toyota closed 12 plants in the nation through tomorrow, Shiori Hashimoto, a spokeswoman for the company, said by phone yesterday. The manufacturer’s profit will be cut by 6 billion yen ($72 million) for each day of lost operations in Japan, while Nissan Motor Co. and Honda Motor Co. may each lose 2 billion yen a day, Goldman Sachs Group Inc. estimated.
Sony Corp. (6758) and Toshiba Corp. (6502) also shut plants following the March 11 earthquake and tsunami, which police said may have killed more than 10,000 people. The disaster may trim 0.3 percent from Japan’s economy as power outages cut industrial production, Nomura Holdings Inc. estimated in a report.
“Not only is the struck region one of our production bases, those directly hit and vastly affected include our dealers, suppliers and numerous other partners,” Toyota President Akio Toyoda said in a statement on the Toyota City, Japan-based company’s website.
Nissan, Honda
Nissan, Japan’s second-largest carmaker, suspended operations at four plants until tomorrow and at two other plants until March 18, the Yokohama-based company said yesterday in a statement.
The automaker earlier said 2,300 new vehicles were damaged by tsunami surges in the wake of the 9.0-magnitude earthquake, the strongest ever recorded in Japan. Nissan doesn’t have an estimate of how much production may be lost, said Yuichi Nakagawa, a spokesman for the company.
Honda, the nation’s third-largest carmaker, will halt output through March 20, reducing production by an estimated 16,600 cars and trucks and 2,000 two-wheelers, Tomoko Takamori, a spokeswoman for the Tokyo-based company, said yesterday.
Tokyo Electric Power Co., battling a possible meltdown at a nuclear reactor 220 kilometers (135 miles) north of Tokyo, planned rolling blackouts to conserve power. Millions of people remained without electricity or water as Japan sought aid from the United Nations atomic agency.
‘Panic Selling’
“This earthquake affected a wide area, and it’s likely that the economic impact will exceed the 20 trillion yen in damage sustained during the Kobe earthquake” of 1995, Economic and Fiscal Policy Minister Kaoru Yosano said yesterday.
Toyota fell 4.2 percent to 3,170 yen as of 9:39 a.m. in Tokyo trading, extending its two-day drop to 12 percent. Japan’s benchmark Nikkei 225 Stock Average declined 5.6 percent after plunging 6.2 percent yesterday. Nissan slid 2.9 percent, and Honda lost 3.3 percent.
Daihatsu Motor Co., 51 percent owned by Toyota, may lose production of 9,600 units as it closes factories through tomorrow, Fumihiko Kondo, a spokesman for the Osaka-based carmaker, said yesterday.
Mitsubishi Motors Corp. (7211) planned to resume production at its three Japan factories tomorrow after a two-day halt, Kai Inada, a spokesman for the Tokyo-based carmaker, said today.
“We don’t know how many cars we are going to lose” from the stoppage, said Yuki Murata, a company spokesman. Domestic production totaled 660,104 vehicles in 2010, he said.
Mazda Shortage
Mazda Motor Corp. (7261) will extend a production halt at four Japan plants until at least tomorrow night due to a parts shortage, Ken Haruki, a spokesman for the Hiroshima-based carmaker, said by phone yesterday. The company isn’t disclosing how much output it will lose, he said.
Hino Motors Ltd. (7205) said it planned a stoppage until at least tomorrow, and Hiromichi Suwa, a spokesman, said the company was trying to calculate the potential loss. Rival truckmaker Isuzu Motors Ltd. (7202) said it would stop output at its two Japan plants until March 18.
Japan’s automakers may be able to make up for lost output by using excess production capacity at unaffected plants and running assembly lines on overtime and during holidays, Nomura analyst Jiyun Konomi said in a March 13 report.
“Capacity utilization at Japanese automakers’ plants in Japan is low,” Konomi wrote. “There does not appear to have been major damage to building or machinery and equipment” at Toyota and Nissan’s factories in the affected areas, he wrote.
Sony Damages
The main risk to Japan’s manufacturing comes from the earthquake’s impact on infrastructure, rather than from direct damage to factories, Bhavtosh Vajpayee, head of technology research at CLSA Asia-Pacific Markets in Hong Kong, said in a March 13 report. The quake may trigger a supply shortage for electronic components including batteries and memory chips, Vajpayee said in the report.
“Closure of ports, damage to roads and electric power outages can do serious damage to the tech supply chain,” he wrote, adding that Japan is “critical” to the global supply in several electronics sectors.
Japan makes 44 percent of the world’s audiovisual equipment, 40 percent of electronic components, 19 percent of semiconductors and about 20 percent of all technology products, Vajpayee wrote.
Sony, Japan’s biggest exporter of consumer electronics, halted operations at 10 factories and two research centers yesterday because of power outages and damages, said Mami Imada, a spokeswoman for the Tokyo-based company.
Toshiba, Canon
The Tokyo-based company won’t disclose production capacity of the factories that were closed, said Shinji Obana, a Sony spokesman. The company’s shares fell 5.2 percent in Tokyo trading as of 9:41 a.m.
Toshiba, which makes products ranging from memory chips to nuclear power plants, halted five factories due to power outages and closed one plant because of damage from the earthquake, the Tokyo-based manufacturer said yesterday.
Toshiba makes between 25 percent and 35 percent of the world’s NAND chips, used in smartphones and tablets, the CLSA report said. The company plunged 16 percent yesterday and was untraded as of 9:42 a.m.
Canon Inc. (7751), the world’s largest maker of cameras, said it would suspend operations at eight production and development facilities in northern Japan. Canon shares fell 4.1 percent.
Panasonic Corp. (6752) stopped operations at factories making digital cameras, audio equipment, electronic materials and devices, Akira Kadota, a spokesman for the Osaka-based company, said yesterday. The shares dropped 6.9 percent.
To contact the reporter on this story: Terje Langeland in Tokyo at [email protected]
To contact the editor responsible for this story: Michael Tighe at [email protected]
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Samsung, Ford Produce While Awaiting Word From Japanese Suppliers
By Tim Culpan and Alan Ohnsman - Mar 15, 2011 10:57 AM GMT+0700
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Business ExchangeBuzz up!DiggPrint Email . Samsung Electronics Co. employees check LCD monitors on the production line at the company's factory in Suwon, South Korea. Photographer: Seokyong Lee/Bloomberg
The chassis for a new 2012 Ford Motor Co. Focus sedan sits on the production line at the company's Michigan Assembly Plant in Wayne, Michigan. Photographer: Jeff Kowalsky/Bloomberg
Samsung Electronics Co., Ford Motor Co. (F) and Boeing Co. (BA) are maintaining global production while waiting for partners in quake-rattled Japan to increase one key export: information.
The companies are among manufacturers worldwide that depend on Japan for everything from memory chips to batteries for hybrid cars. The goal is to avoid parts shortages while Japanese suppliers such as Sanyo Electric Co. and Toshiba Corp. make sure they have access to power, water, transportation and materials.
“We’re OK for a few weeks, and I can’t tell you beyond that,” Boeing Commercial Airplanes President Jim Albaugh said in an interview in Scottsdale, Arizona. Japanese companies designed and supply 35 percent of the structure of Boeing’s new 787 Dreamliner, which is three years behind schedule.
Four days after the magnitude 9.0 earthquake, Germany’s Bayerische Motoren Werke AG (BMW), truckmaker Volvo AB of Sweden and Phoenix-based ON Semiconductor Corp. (ONNN) all say it’s too early to know how they’ll be affected by their Japanese vendors or customers. One reason is the lack of information flowing from suppliers, and from the suppliers’ suppliers.
Companies such as South Korea’s Samsung and Taiwanese smartphone maker HTC Corp. (2498), taking no chances, are seeking other sources to avoid shortages that might shut production.
“The reality is the companies don’t know the full extent of what’s happened,” said economist Kim Hill at the Center for Automotive Research in Ann Arbor, Michigan. “You can’t build a car with 97 percent of the parts -- you pretty much need all of them.”
Power Supply
Japan, a top global supplier to the electronics and auto industries, may need weeks to recover lost output from the Asian country’s strongest earthquake on record, according to Barclays Capital.
The earthquake and ensuing tsunami may have killed more than 10,000 people and the Nikkei 225 (NKY) Stock Average has tumbled 18 percent since yesterday. Electricity shortages caused by a shutdown of nuclear power plants in northern Japan is limiting the ability of suppliers to return to production.
“Sanyo supplies our hybrid batteries from Japan,” said Todd Nissen, a spokesman for Dearborn, Michigan-based Ford, the second-largest U.S. automaker by unit sales. “We have not had any supply disruptions at this point but, like the rest of the supply base, Sanyo is continuing to assess the situation.”
Sanyo, which is 80 percent owned by Panasonic Corp. (6752), supplies the nickel-metal battery packs for Ford’s Fusion hybrid sedan that’s assembled in Mexico.
Electronics Suppliers
Two U.S. chipmakers who supply the auto industry reported disrupted production at their plants in Japan. Texas Instruments Inc. (TXN), the second-largest U.S. chipmaker, said its sales will be hurt in the first and second quarters, while Freescale Semiconductor Inc. of Austin, Texas, said its plant in hard-hit Sendai has ceased operations.
Japanese companies including Shin-Etsu Chemical Co., silicon-wafer manufacturer Sumco Corp. (3436) and automotive supplier Denso Corp. (6902) temporarily halted production. Even when suppliers are able to keep producing, concern about potential shortages is driving up costs. Prices of semiconductors used in personal computers and mobile phones jumped.
“Our biggest concern is component availability or higher component prices,” said Kirk Yang, Barclay Capital’s managing director and head of technology-hardware research for Asia excluding Japan.
Japanese companies including Toshiba, Sony Corp. (6758), Panasonic and Elpida Memory Inc. (6665) supply 20 percent of the world’s technology products, including 44 percent of audio-visual equipment, 40 percent of electronic components and 19 percent of semiconductors, CLSA Asia-Pacific Markets estimates.
Flash-Memory Prices
The price of the benchmark DDR3 1-gigabit dynamic random- access memory chip climbed 7 percent to $1.11, the largest gain since Jan. 27, according to Taipei-based DRAMeXchange. Spot prices of the 4-gigabit NAND flash-memory chip rose 17 percent.
Toshiba, which makes 35 percent of the NAND flash that stores information in phones, tablets like Apple Inc.’s iPad 2, and digital cameras, shut its factories after Tokyo Electric Power Co. requested companies cut electricity consumption, the Tokyo-based company said in a statement yesterday.
Rambus Inc. (RMBS), the Sunnyvale, California-based designer and licenser of technology to connect memory chips to other semiconductors, got about 36 percent of its revenue from Japan last year. Most came from Toshiba, Elpida Memory Inc. and Sony, which uses Rambus technology in the Playstation 3, said Jeff Schreiner, an analyst with Capstone Investments Inc.
Auto-Plant Closures
Japan is a major source of electronic components for autos and is the primary supplier of batteries and parts for hybrid vehicles, said Hill, the automotive research group economist.
The U.S. relies on Japan for about 14 percent of parts for auto production, Hill said, predicting that Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. will see the biggest impact to their U.S. operations.
While Ford hasn’t experienced any parts disruptions so far, “We are still working with our Tier 1 suppliers, who are in turn assessing the Tier 2 supply base,” spokesman Nissen said.
Toyota, Honda and Nissan all suspended domestic auto production until at least March 16, and until March 20 in Honda’s case. Toyota may lose as much as $72 million for each day of lost production, according to a Goldman Sachs estimate.
“Suppliers’ production stoppages could easily affect global production for these automakers, given that several of the affected component plants supply the (carmakers’) facilities around the world with systems and components that may not easily be shifted to other manufacturing locations,” IHS Automotive said in a report. “Disruption to production of parts that are unique and cannot be easily shifted has the potential to hit output badly at several automakers in the near term.”
Volvo Cars, the Swedish carmaker owned by China’s Zhejiang Geely Holding Group Co., buys about 10 percent of its components from Japan, spokesman Per-Ake Froberg said. “Our production won’t be affected this week, but then we’ll see,” he said.
iPad Parts
Supply of batteries, Blu-ray compact discs, and magnetic heads used in hard disk drives may also be affected by the quake and power shortage, Taipei-based research company Trendforce Inc. wrote in a report yesterday.
Notebook computer and tablet battery output for products including Apple’s iPad may be affected if Seiko Holdings Corp.’s shutdown persists because the Tokyo-based company supplies a chip crucial to regulating power in electronics products, Trendforce wrote. Murata Manufacturing Co., which supplies specialized communications components for Apple Inc. (AAPL)’s iPad 2, said yesterday it shut down its factory in Sendai, Miyagi Prefecture, because of a lack of gas, power and water.
Silicon Wafers
Taiwanese and Korean chipmakers may also be forced to cut output if shutdowns in Japan persist because the country supplies more than 80 percent of the world’s silicon wafer supply, said Joyce Yang, an analyst at DRAMeXchange in Taipei. Wafers are thin round slices of silicon that are the key material used in the production of chips.
Samsung and Powerchip Technology Corp. (5346), the largest Korean and Taiwanese memory-chip makers, both stopped offering DRAM chips in the spot market after concern their own production may be affected by a shortage in supply of wafers.
Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. (2303), the world’s largest contract manufacturers of chips, may miss second-quarter and third- quarter revenue estimates because of disruptions to the supply of silicon wafers, Goldman, Sachs & Co. Beijing-based analysts Donald Lu, Evan Xu and Hu Lingling wrote in a report yesterday.
The prospect of shortages prompted Taoyuan, Taiwan-based HTC to activate a “secondary supply chain,” it said in a March 13 e-mail. Samsung, which makes phones and televisions as well as components, is preparing for possible shortages of materials, spokesman James Chung said.
As for Boeing, its main Japanese suppliers came through “in pretty good shape” and have recalibrated tools already, Albaugh said. “The question we can’t answer yet is will they limit power to some of these facilities? And what does the transportation infrastructure look like? Can the employees get to work?”
ภาพรวมกว้างๆนะครับ ระหว่าง USA กับ ญี่ปุ่น แนวคิดใช้กับไทย-ญี่ปุ่นเหมือนกัน
Rambus Chips, Coach Bags Risk Japan Sales Drop After Quake
By Thomas Black - Mar 15, 2011 11:01 AM GMT+0700
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Business ExchangeBuzz up!DiggPrint Email .Aflac Inc. (AFL) insurance, Rambus Inc. (RMBS) memory-chip interfaces and Coach Inc. (COH) leather handbags are among the products from U.S. companies at risk for lost sales in Japan after the country’s worst earthquake ever.
Japan generated about 75 percent of Aflac’s 2010 sales, the most among U.S.-based companies with a market value of at least $100 million, according to data compiled by Bloomberg. At least 35 companies including Rambus, Coach and jewelry-maker Tiffany & Co. (TIF) had 15 percent or more of sales from Japan, the data show.
Quake disruptions range from “substantial” damage to a Texas Instruments Inc. (TXN) plant in Miho, Japan, that will hurt sales in two quarters to possible shifts in consumer behavior as the world’s third-wealthiest nation rebuilds. Coach and Tiffany said they both had shut some stores in Japan.
“Even for consumers who have the means, they may not be in the mood to open up their wallets and spend conspicuously,” said Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc. (FII), which oversees about $360 billion.
U.S. manufacturers whose Japanese corporate customers are idled by the March 11 earthquake and tsunami in the northern part of the country are among those that may feel the pinch most quickly. Concern that a damaged nuclear plant may experience a meltdown is weighing on investors and consumers.
Rambus’s biggest sources of Japanese sales include Toshiba Corp. (6502) and Elpida Memory Inc. (6665), both of which have had some plant shutdowns, and Sony Corp. (6758), said Jeff Schreiner, a Capstone Investments Inc. analyst in San Diego. In 2010, 36 percent of Sunnyvale, California-based Rambus’s sales came from Japan. A spokeswoman, Linda Ashmore, declined to comment.
Aflac Insurance
Aflac, the supplemental health-insurance company, has been in Japan since the 1970s, according to its website. The Columbus, Georgia-based company said yesterday it was keeping its forecast for 2011 operating earnings unchanged “at the low end” of an 8 percent to 12 percent increase.
“We expect Aflac Japan sales will only be minimally impacted by these events,” Aflac said in a statement hours before it fired comedian Gilbert Gottfried, the voice of its duck mascot in the U.S., after comments he made about tsunami victims.
The temblor’s drag on the economy may be greater than that of the Kobe earthquake in 1995, Shun Maruyama, a Credit Suisse AG equity strategist in Tokyo, said yesterday in a report.
“We also expect consumers to curb consumption for a long period across a wide swath of the country, including the Tokyo metropolitan area,” Maruyama said.
Golf Effect?
Golf may be among the industries at risk in a nation whose $38,177 in unadjusted per-capita gross domestic product in 2009 trailed only Luxembourg and Norway. After the U.S., Japan was the second-largest market for Carlsbad, California-based Callaway Golf Co. (ELY) in 2010, accounting for $164.8 million in sales, or 17 percent of revenue.
“Japan has continued to be an important market for them,” said Casey Alexander, an analyst for Gilford Securities in New York who recommends holding Callaway. “If the whole country freezes up for some time, that’s a problem.”
Japan has the second-most active golfers after the U.S., with about 9 million, according to KPMG Advisory Ltd.
Coach shut 20 of its 165 stores in Japan and cut staff and shortened hours at others, said Andrea Resnick, a spokeswoman for the New York-based company. Tiffany, also based in New York, has 230 stores worldwide and closed some of its 55 outlets in Japan, said Mark Aaron, a spokesman, who declined to elaborate.
“The situation is fluid,” Aaron said. Tiffany had 19 percent of sales in Japan and Coach had 20 percent, according to the Bloomberg data for their most-recent fiscal years.
Japan Consumers
Japanese consumer sentiment may drop as much as 20 percent, about the same as in the U.S. following Hurricane Katrina in 2005, David Schick, an analyst with Stifel Nicolaus & Co. in Baltimore, wrote in a note yesterday. That sentiment likely will recover in three months, just as it did with Katrina, he said.
The effect on U.S. trade overall will be small, said Andrew Rose, associate dean of the Haas School of Business at the University of California, Berkeley. Some companies such as Caterpillar Inc. (CAT) may gain by selling equipment to help Japan rebuild, he said. Other U.S. companies that compete with the Japanese may benefit, he said.
“In terms of American commercial interests, this is not a particularly huge deal,” he said. In 2010, Japan bought $60.5 billion of U.S. goods, according to the U.S. Commerce Department, and sold $120.3 billion to the U.S.
Factory Damage
Some quake disruptions for U.S. companies will involve those with their own operations in Japan, such as Dallas-based Texas Instruments.
The damaged plant located about 40 miles (64 kilometers) northwest of Tokyo produced 10 percent of Texas Instruments’ output by revenue and won’t be back to full shipments until September, according to TI, reported getting 9.8 percent of 2010 revenue from Japan.
Japan provides about 40 percent of technology components worldwide, and plants had been at almost full capacity before the quake, said Paul Martin, vice president of marketing in Chicago of BravoSolution, a Milan, Italy-based supply management firm.
“Prices are going to go up and lead times are likely going to increase,” Martin said in a telephone interview. “It’s going to be a double whammy for U.S. companies that depend on those Japanese components.” Freeport-McMoran Copper & Gold Inc. (FCX) doesn’t expect a significant impact to sales of copper concentrates to Japan’s Pan Pacific Copper Co., Mitsubishi Materials Corp. (5711) and other copper-smelting companies, said Eric Kinneberg, a spokesman. The Phoenix-based company got 18 percent of 2010 revenue from Japan. [/size]
Air Travel
While the quake-ravaged areas in northern Japan aren’t significant destinations for business or leisure travel, U.S. airlines face risks in the Japan disaster, according to Philip Baggaley, a Standard & Poor’s credit analyst in New York.
“The current uncertainty and fears related to a possible meltdown and other problems at stricken nuclear power plants could deter travelers,” he said. United Continental Holdings Inc. (UAL), the parent of United and Continental airlines, is the biggest U.S. carrier across the Pacific, based on passenger traffic, followed by Delta Air Lines Inc. (DAL) and AMR Corp. (AMR)’s American Airlines.
“Outbound Japanese travel is, we believe, also likely to be significantly affected, as citizens focus their attention on events in their home country,” Baggaley wrote.
To contact the reporter on this story: Thomas Black in Monterrey at [email protected]
To contact the editors responsible for this story: Ed Dufner at [email protected];
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Earthquakes Don’t Add to Wealth of Nations: Caroline Baum
By Caroline Baum - Mar 16, 2011 6:00 AM GMT+0700 Bloomberg Opinion
It takes a crisis, such as the financial meltdown in 2008, to rally support for a Keynesian style fiscal stimulus.
It takes another kind of crisis, specifically the earthquake and tsunami that devastated the northeastern coast of Japan last week, to expose the Keynesian fallacy that the government can spend its way to prosperity.
For that reason, Acts of God provide a teaching moment. They make the distinction between spending and wealth so blatantly obvious that even the most dyed-in-the-wool believer in the value of digging holes and filling them up will be hard pressed to deny it.
The flawed thinking emerges right on cue after every earthquake, flood or other natural disaster when economists put pen to paper, or input into model, to calculate the effect.
First comes the hit to output, or gross domestic product. Some of Japan’s productive capacity was destroyed. Power disruptions forced other companies, including the country’s auto manufacturers and chipmakers, to halt production, creating a ripple effect through the entire supply chain, in Japan and abroad.
Small businesses destroyed by the earthquake may not be able to make payroll or pay their creditors, in some cases causing them to default on their bank lines. Most companies will feel the effect of the damage to the national infrastructure, including roads, railways and the power grid.
Et Alia
The list goes on. You get the idea that what happened is a big negative for the Japanese economy, which never regained its position in the global hierarchy following the bursting of the real estate and stock-market bubbles in 1989.
Yet some economists still see a silver lining for Japan’s economy in the wake of the disaster, claiming reconstruction efforts will create jobs and stimulate growth.
They’re not optimists; they’re just misinformed.
Larry Summers managed to put his foot in his mouth last week when asked about the effect of the earthquake. The former top economic adviser to President Barack Obama, former Harvard University president, former Treasury secretary and now ordinary professor at Harvard’s Kennedy School of Government, told CNBC the earthquake and its aftermath “may lead to some temporary increments, ironically, to GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength.”
General Theory of Nonsense
Too bad Japan had to wait 16 years for another opportunity.
The blogosphere was quick to pounce. At Cafe Hayek, George Mason University economics professor Russell Roberts provided a translation of Summers’s comments for readers who responded to his initial post.
“He wasn’t saying the tsunami was a good thing,” Roberts said. He was saying that “rebuilding would be good for the economy, that spending creates prosperity.”
For John Maynard Keynes, building pyramids in the 20th century made sense, too. And two “masses to the dead” were better than one, he wrote in “The General Theory of Employment, Interest and Money.” “Pyramid-building, earthquakes, even wars may serve to increase wealth” and cure involuntary unemployment.
Eighty-five years before Keynes penned the “General Theory,” French political economist Frederic Bastiat pointed out the fallacy in his thinking.
“Destruction is not profit,” Bastiat wrote in his 1850 essay, “That Which Is Seen and That Which Is Unseen.”
Seen vs. Unseen
I’m glad to see that Bastiat is enjoying something of a revival, judging from the numerous post-earthquake commentaries that reference his parable of the broken window. Bastiat used the analogy of the broken window, and the spending that flows from it (that which is seen) to point out that which is unseen: How the money used to repair the window -- government spending on fiscal stimulus -- could have been spent more efficiently if the window hadn’t been broken.
Japan won’t be better off -- richer, as a nation -- as a result of the rebuilding effort. Housing starts will increase, but the housing stock won’t. The same goes for factories and office buildings.
A nation isn’t richer when it has to allocate scarce resources to rebuilding. Just think how the money could have been used, in ways only entrepreneurs can envision, rather than rebuild what was destroyed.
Here’s Bastiat again:
“If, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, ‘Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.’”
One hundred and fifty years later, Keynesians are still flying blind.
Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)
To contact the writer of this column: Caroline Baum in New York at [email protected].
To contact the editor responsible for this column: James Greiff at [email protected]
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ขอบคุณสำหรับทุกความเห็นครับ แนะนำให้อ่านบทความนี้ เกี่ยว กับ japan จะ repatriate ครับ ผมมองว่าสำคัญในมุม macro นะ และ yen ก็พุ่งปรี๊ดแล้ว
Japanese Will Repatriate Funds After Earthquake, El-Erian Says: Tom Keene
By Charles Mead and Tom Keene - Mar 15, 2011 10:38 PM GMT+0700
March 15 (Bloomberg) -- Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., discusses the outlook for Japanese investors to repatriate funds as the nation seeks to recover from its strongest earthquake on record. El-Erian speaks from Newport Beach, California, with Tom Keene and Ken Prewitt on Bloomberg Radio's "Bloomberg Surveillance." (Source: Bloomberg)
Japanese investors will repatriate funds as the nation seeks to recover from its strongest earthquake on record, said Mohamed El-Erian, chief executive officer at Pacific Investment Management Co.
“We know that inflation will spike because of shortages and because of supply chain disruptions, and we know that the deficit and public debt are going to increase significantly,” El-Erian, who’s also co-chief investment officer, said in a telephone interview on “Bloomberg Surveillance” with Tom Keene. “Fortunately, Japan is a rich economy, and the private sector has saved a lot. Japan can navigate this.”
Japanese Prime Minister Naoto Kan called for calm today as the world’s most indebted developed country battled to cool three quake-damaged nuclear reactors with seawater and Tokyo shoppers stripped water, food and batteries from supermarket shelves. Chief Cabinet Secretary Yukio Edano said radiation readings outside reactors rocked by explosions were falling below levels that are harmful, while a fire at a separate unit appeared to have been put out.
Stocks plunged and Japan’s Nikkei 225 index posted its biggest two-day drop since 1987 after the news that a third explosion and fire struck Tokyo Electric Power Co.’s Fukushima plant, and supermarkets reported panic buying. Hundreds of thousands of people without power faced freezing temperatures after Japan’s strongest earthquake on record last week caused a 7-meter (23 foot) tsunami that engulfed the northeast coast.
The yen rose for the third day against all of its major counterparts as speculation increased that demand for the currency may increase as insurance companies and lenders use it to rebuild.
Bank of Japan
“The critical issue is whether the private sector repatriates its capital -- a lot of it is held abroad,” El- Erian said. “And I suspect that it will.”
The Bank of Japan added 5 trillion yen to the financial system in a one-day operation today. BOJ Governor Masaaki Shirakawa has pledged to keep pouring cash into the economy to stabilize markets. The bank injected 15 trillion yen ($185 billion) yesterday and doubled its asset-purchase program to 10 trillion yen, an increase that’s about one-tenth the size of the Fed’s program of buying Treasuries.
The Topix slid 9.5 percent at the close, following a 7.5 percent drop yesterday. Japan’s currency rose 0.9 percent to 80.90 per dollar. Bonds halted a two-day rally, sending 10-year yields 1.5 basis points higher to 1.215 percent.
Investment Options
There are investment opportunities in “solid countries” where prices have declined, El-Erian said. He didn’t specify what securities Pimco purchased since the disasters in Japan prompted havoc in global financial markets.
Bill Gross, the co-chief investment officer with El-Erian and founder of Pimco, has urged investors to reduce holdings of Treasuries and U.K. gilts and buy higher-returning securities such as debt from emerging-market nations such as Brazil.
Gross last month increased holdings of emerging-market debt to 10 percent in his $237 billion Total Return Fund, the highest level since October, from 9 percent in January.
Pimco, based in Newport Beach, California, is the world’s biggest manager of bond funds and oversees more than $1 trillion in assets.
Japan Says No Evidence Insurers Repatriating Assets
By Toru Fujioka and Aki Ito - Mar 17, 2011 10:07 AM GMT+0700
March 16 (Bloomberg) -- Robert Sinche, global head of currency strategy at RBS Securities Inc., discusses the impact of Japan's natural disasters and nuclear plant crisis on global currency markets, and the outlook for the yen. The yen reached its strongest level since 1995 versus the dollar as risk of radiation leaks from crippled nuclear plants in Japan added to speculation insurers and investors will redeem overseas assets to pay for damages. Sinche speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
Japan’s government said there’s no evidence that insurance companies are repatriating assets from abroad and that the yen’s climb today was driven by speculation.
“The speculation was that Japanese life and casualty insurers will repatriate dollar-denominated assets to secure funds in wake of the earthquake,” Economic and Fiscal Policy Minister Kaoru Yosano told reporters in Tokyo today. “But they have ample cash, deposits and other liquid assets,” he said, adding that the Financial Services Agency and Bank of Japan have confirmed insurers aren’t selling their dollar assets.
Policy makers have so far focused on offering intraday cash to banks, with the central bank limiting its additional monetary stimulus three days ago to 5 trillion yen, an amount about one- tenth the size of the U.S. Federal Reserve’s quantitative easing. Sustained yen strengthening risks eroding exporter earnings, making a case for officials to intervene, some analysts said.
“With Japan facing a difficult situation, the yen’s rapid advance could damp its economy further, which is not good for the global economy,” said Masafumi Yamamoto, chief currency strategist at Barclays Bank Plc in Tokyo, saying it’s possible the Group of Seven could mount joint intervention to sell yen.
Japan’s currency was at 79.26 per dollar as of 11:44 a.m. in Tokyo, down 4 percent from the high reached earlier today. It’s advanced 4.6 percent since the close on March 10, a day before the disaster struck Japan.
Intervention Question
Finance Minister Yoshihiko Noda declined to comment on whether the ministry would order the Bank of Japan to intervene in the foreign-exchange market, saying that markets were nervous. A government official speaking on condition of anonymity said that local institutional investors have abundant yen, and that repatriation wasn’t significant after the 1995 Kobe earthquake.
Meantime, the central bank pumped 5 trillion yen ($63 billion) into money markets today.
The Nikkei 225 Stock Average retreated 2.1 percent, recouping losses after dropping as much as 5 percent after trading began. The rout in the equity market has brought the index’s losses to 16 percent since the magnitude-9 earthquake and ensuing tsunami on March 11 devastated northeast Japan and crippled the cooling systems at a nuclear power plant.
The government is still struggling to get the Fukushima Dai-Ichi nuclear facility under control, with helicopters dropping water on the plant in an effort to prevent a meltdown.
Break-Even Point
Japan’s exporters said they can remain profitable as long as the yen trades at 86.30 per dollar or weaker, compared with the previous year’s breakeven point at 92.90, the Cabinet Office said in an annual survey released on March 11.
Every one yen the currency appreciates against the dollar erodes about 30 billion yen from Toyota Motor Co’s earnings, according to the company. Honda Motor Co, which produces over 70 percent of its vehicles outside Japan, loses 17 billion yen for each one yen the currency strengthens against the dollar.
Because exporters’ operations are already disrupted at the moment, yen appreciation may have little immediate effect, lessening the need for policy makers to act, said Azusa Kato, an economist at BNP Paribas SA in Tokyo.
“A stronger yen would actually help companies secure the goods and supplies they need, especially at the disaster regions, because it would make imports cheaper,” said Kato. “Stopping the yen’s gains isn’t the government’s top priority right now.”
Last Intervention
Japan’s government hasn’t ordered the BOJ to sell yen in the market since Sept. 15, which was the first time Japan intervened since 2004. That move followed a jump in the yen on speculation that Prime Minister Naoto Kan, who had won re- election as head of the ruling party, would be less likely to endorse yen sales than his top opponent.
G-7 members haven’t entered the market together since September 2000, when they sought to buoy the euro as it tumbled in its second year of existence.
BOJ Governor Masaaki Shirakawa said on March 13 that he was prepared to unleash “massive” liquidity to secure stability, a commitment followed up the next day with a record 15 trillion yen in one-day cash, with injections diminishing since then.
The central bank in a March 14 policy meeting also decided to double its asset-purchase program to 10 trillion yen, including Japanese government bonds, exchange-traded funds and real estate investment trusts.
TOKYO (Reuters) - The level of radiation detected at the Tokyo Electric Power Co Fukushima plant has fallen steadily over the past 12 hours, an official at Japan's Nuclear and Industrial Safety Agency said on Thursday.
A level of 752 microsieverts per hour was recorded at the plant's main gate at 5 p.m. (0800 GMT) on Wednesday, said the official, Tetsuo Ohmura. The monitoring point was then changed to the plant's west gate and readings were taken every 30 minutes, he said. At 5 a.m. the reading was 338 microsieverts per hour.
That level was still much higher then it should be, but was not dangerous, and that by comparison absorption of a level of 400 was normal from being outside over the course of a year, Ohmura said.
Conflicting Information Drives Anxiety in Japan Nuclear Crisis
By Mehul Srivastava and Shigeru Sato - Mar 18, 2011 1:52 AM GMT+0700
Accurate and timely information from Tokyo Electric Power Co. about the accident at its nuclear plant in
northern Japan has been hard to come by.
About 60 reporters at a March 16 briefing with utility officials wanted to know whether helicopters would dump seawater on reactors at the Dai-Ichi station to prevent a meltdown. The company was considering the plan, said Masahisa Otsuki, head of the nuclear maintenance division.
At the same time, a live broadcast on a nearby TV screen showed a helicopter taking off with a massive bucket of water hanging from its belly. Reporters barraged the officials.
“We are sorry,” a spokesman said. “We need to check on this.”
Prime Minister Naoto Kan was so frustrated March 15 by a delay in informing him of a fire in reactor No. 1 that he asked utility officials, “What the hell is going on?,” news agencies reported.
Neighboring China, worried about the spread of radiation from damaged reactors, urged Japan to keep the world fully informed of its efforts and to provide timely and accurate information, Foreign Ministry spokeswoman Jiang Yu said.
‘Confusing Situation’
“It’s a confusing situation, and we’re not getting consistent reports out of Japan,” said Gerry Thomas, professor of molecular pathology at Imperial College London, who studied the aftermath of the Chernobyl disaster. “There is an awful lot of misinformation, I think, being put out.”
On March 16, spokesmen for Asia’s biggest utility, also known as Tepco, appeared to indicate that the containment vessel of reactor No. 3 was breached, citing a fire and a surge in radiation as evidence. They later backtracked after no breach was found.
They also told reporters that smoke was coming out of reactor No. 4, then later corrected that to reactor No. 3.
Miho Mak, 33, a Japanese housewife, said in an interview in Hong Kong that she and her husband, Alec, 32, left Tokyo March 15 to stay with his parents in Hong Kong.
“We’re furious about a lack of information from both the government and Tepco,” Miho Mak said. “We also noticed there are conflicting accounts from the parties. Foreign media is reporting the impact of the nuke accident would be disastrous while Japanese media play it down. The gap also urged us to leave.”
Different Roles
The government, Tepco and the Nuclear and Industrial Safety Agency have different roles to play in disseminating information, Chief Cabinet Secretary Yukio Edano said.
“Each party should take its own responsibility and ensure coordination to avoid information confusion,” he said.
Experts on nuclear accidents say they are frustrated by the lack of information. People searching for news on the worst nuclear accident since Chernobyl have crashed the International Atomic Energy Association’s website.
“Tepco are doing the absolute minimum public announcements,” said John Price, a Melbourne-based consultant on industrial accidents and former policy staffer at the U.K.’s National Nuclear Corp. Price also called for more details from General Electric Co. (GE) on its reactors. Tepco operates and maintains the Dai-Ichi plant complex.
GE Designs
All six boiling-water reactors at the Fukushima site are based on GE reactor designs, and the company built Nos. 1, 2 and 6, according to GE. Toshiba built and supplied reactors for 3 and 5, while Hitachi Ltd. built No. 4. The oldest, No. 1, began operation in 1971, according to information on the International Atomic Energy Agency’s website.
GE Chairman and Chief Executive Officer Jeffrey Immelt said in March 14 comments that the company, which runs its nuclear business through a venture with Hitachi Ltd., is offering technical assistance to Tepco and Japan. Steve Bolze, CEO of GE’s Power & Water unit said March 16 that the company stands by its reactor’s design, which exceeded performance set by Japanese regulation standards in the earthquake and tsunami.
U.S. equities extended their retreat March 16 after U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko told lawmakers that all the water had drained from a spent-fuel pool at Fukushima, and high levels of radiation were being released. The Standard & Poor’s 500 Index has fallen 2.6 percent since March 11, as of 2:30 p.m. New York time.
Premature Panic
“Investors are selling on the appearance of a negative situation with the nuclear reactors, and you can’t say it’s unfounded because we don’t know how bad this may get,” said Christopher Sheldon, the Boston-based director of investment strategy at BNY Mellon Wealth Management, which oversees $166 billion globally.
People are envisioning “worst-case” scenarios based on unreliable and often incomplete information, mostly collected from media reports, said Geoff Parks, a nuclear engineer at the University of Cambridge in the U.K.
Panic over the possibility of uncovered fuel rods leading to new nuclear reactions was premature, he said. The rods would need to reach at least 2,200 degrees Celsius (4,000 degrees Fahrenheit), the melting point for uranium dioxide, the primary fuel in the rods.
The last known temperature in the fuel ponds was less than 100 degrees Celsius, Tepco officials said.
The Associated Press reported at the time that Tepco disagreed with Jaczko’s assessment, even though most of its measuring equipment was broken.
“We haven’t been able to get any of the latest data at any spent fuel pools,” Otsuki said. “We don’t have the latest water levels, temperatures, none of the latest information for any of the four reactors.”
JAPAN'S seven major carmakers are reeling in the wake of the massive earthquake and tsunami that hit the country.
Production has been stopped at most factories this week, with Honda extending its shutdown through until at least Sunday, despite minimal damage at the big car plants that are located to the south of Tokyo.
Related CoverageJapan car industry says no disruptionKorea ahead of Japan in car warsJapanese carmakers stumblingChinese cars ‘no threat’ The problems caused by the quake include everything from damage to component supply companies and power interruptions in the disaster zone to the time needed for workers to re-connect with family members affected by the events. There are also concerns about damage to port facilities needed for exports, including shipments to Australia.
The only direct casualty was a death at Honda's research-and-development centre at Tochigi, although 16 other people were also injured. The Australian outposts of the Japanese brands are still battling to get information and any long-term predictions, although there is at least one chilling story from Nissan.
"Head office in Yokohama is on skeleton staff; many hundreds stayed there on Friday night, some walked 20 kilometres home," says Nissan Australia's Jeff Fisher, speaking soon after the quake. Nissan's port facilities at Hitachi were also badly affected by the tsunami.
But Fisher reassures supporters of the brand's sports cars, which are built at the Tochigi factory which was affected by the quake "We have recently received a major shipment of GT-R and Model Year 2011 Z-car from Tochigi so have supply for the next couple of months or so," he says.
At Honda, the short-term worry is for 113 suppliers in the quake zone and the ongoing interruptions to its operations at Tochigi. It is already predicting the loss of around 16,000 vehicles it was planning to build. Mazda, the biggest pure import brand, says it is not expecting much impact.
"Based on current information, the disaster is unlikely to have any major effect on stock supply to Australia in the short term. Mazda will continue to closely monitor the situation to assess what other effects it may have," says Mazda spokesman, Steve Maciver.
"Mazda's production plants have not been damaged (but the company) will announce any further production changes for March 17 onward as soon as a decision is made. Even so, Mazda is already joining the relief effort.
"As a first response, Mazda is making an immediate donation of 30 million Yen ($368,000) to support rescue efforts and assistance in the region. Mazda plans to monitor the situation and will also make badly needed materials - along with personnel - available as required," the company says.
Toyota is expecting to lose 40,000 vehicles from its short-term production schedule but there is little information yet on the potential knock-on effect in Australia. "It's too early to provide any accurate information. Toyota places utmost priority on ensuring the safety of all team members at Toyota, its subsidiary vehicle manufacturers such as Central and Kanto, and at its suppliers, as well as on confirming the safety of their family members," says Mike Breen, spokesman for Toyota Australia.
Mitsubishi is still waiting for word from Japan but says the one Australian in Japan on business is safe, although it took longer than normal to return to Tokyo for a flight home to Adelaide.
Suzuki has probably done best among the big carmakers. "It appears Suzuki has escaped damage. The earthquake's epicenter was located nearly 400 kilometres north of Tokyo while Suzuki's headquarters are in Hamamatsu City, which is 250 kilometres south of Tokyo," says Suzuki spokesman, Andrew Ellis.
Subaru was also lucky on the location of its Japanese operations. "Our main factory is located at Gunma, northwest of Tokyo. This is inland and a long way from the epicentre. Our cars are shipped ex Yokohama and the extent of damage between the factory and there is still be assessed," says Dave Rowley of Subaru Australia.
HONDA: Factories closed until Sunday.
MAZDA: Two factories shut Tuesday and Wednesday.
MITSUBISHI: Factories closed until Tuesday.
NISSAN: Tochigi factory and engine plant shut until today (Friday).
SUZUKI: Factories shut until at least Wednesday.
TOYOTA: Factories shut until Wednesday (at the earliest).
จาก reuters ครับ, update status ของ auto - electronics maker
Factbox: Japan quake impact on auto makers, electronics firms
Fri Mar 18, 2011 5:06am EDT
(Reuters) - Following is a roundup of the impact of Japan's devastating earthquake and tsunami on auto makers and electronics makers.
Plant shutdowns in Japan threaten supplies to manufacturers across the globe of everything from semiconductors to car parts.
AUTO MAKERS
* Toyota Motor Co (7203.T) has halted operations at its 12 main assembly plants in Japan. That closure has been extended to next Tuesday (March 22), and will result in lost production of 95,000 vehicles. From Monday (March 21), Toyota had said it would begin making car parts at plants near its base in Toyota City, central Japan, for overseas assembly facilities. It had said it would resume this week making parts for service centers to repair vehicles already on the road.
* Honda Motor Co (7267.T) is extending the production halt in Japan to Wednesday (March 23) from March 20. Honda's announcement came after the automaker distributed a memo to U.S. dealers saying it would review each dealers' product allotments for vehicles to be built after May. Honda made 69,170 cars in January in Japan, which accounts for a round a quarter of its production.
* Nissan Motor Co (7201.T) said output has been stopped at three of its four car assembly factories in Japan. Nissan made 81,851 cars in January in Japan, where it manufactures 23 percent of its vehicles. Goldman Sachs has calculated that one day's lost production costs Toyota around 6 billion yen in profit. Honda and Nissan lose around 2 billion yen in profit each lost day.
* Mazda Motor Corp (7261.T) said it plans to suspend production at two plants in southwestern Japan until Sunday (March 20), but has not yet decided how to proceed after that.
* Fuji Heavy Industries Co (7270.T) said all five of its car and parts-related plants for its Subaru-brand vehicles in Gunma prefecture, north of Tokyo, will be shut at least until Sunday.
* Renault Samsung, the South Korean unit of French car maker Renault SA (RENA.PA), said it will cut back on weekend and overtime production because of a potential parts shortage.
* General Motors (GM.N), the largest U.S. automaker, said it would temporarily idle its pick-up truck plant in Louisiana due to a parts shortage. GM's South Korean unit said it, too, was considering cutting back on weekend and overtime production.
ELECTRONICS MAKERS:
* Sony Corp (6758.T) opened one factory, which makes optical films used in LCDs, and adhesives, on Wednesday. Seven plants, which make an array of devices from IC cards to Blu-ray discs to lithium batteries, remain closed. Sony is not sure when the plants will resume operations. Some of those plants' output is supplied to other manufacturers, including customers overseas.
* Toshiba (6502.T) said output was still halted at a factory in Iwate prefecture making system LSI chips for microprocessors and image sensors. It has begun work to bring the factory back on line, but has no timeframe to resume output. Toshiba said an assembly line at a plant in Japan making small liquid crystal displays for smartphones and other devices will be closed for a month to repair damaged machinery.
* Canon (7751.T) said it may not be able to resume production this week at three plants that sustained serious damage in the quake. One makes lenses, another ink jet printers and the third produces equipment for making LCD screens. Canon said it was also forced to suspend production until Friday at one of its main plants in Oita, on the southern island of Kyushu, where it makes cameras, lenses and compact photo printers. The world's largest maker of digital cameras said it was having difficulty securing necessary parts.
* Nikon Corp (7731.T) said four of its production facilities were closed, including two of its precision-equipment plants, but the effect on cameras and lenses is seen as minor, since most output for those devices is in Thailand. Nikon does not have a timetable to re-open the plants.
* Panasonic (6752.T) said none of its northern Japan manufacturing facilities, including those making optical pick-ups and other electronic parts, digital cameras and audio equipment, were badly damaged, but it would take time to resume operations as infrastructure needed to be restored.
* Renesas (6753.T), the world's No.5 chipmaker, said it has halted operations at 8 of its facilities and was unsure when it would restart production there.
OTHERS
* Shin-Etsu Chemical (4063.T), the world's leading maker of silicon wafers, said two of its plants near the worst-hit areas remain offline. The firm has not said when it will restart operations. Some of the wafers made here are shipped to chip companies overseas. Shin-Etsu is trying to boost production elsewhere, particularly of 300-millimetre wafers, to make up the shortfall.
* Jamco (7408.T), a Japanese company making galleys for the long-awaited Boeing (BA.N) 787 Dreamliner, said delivery of the component could be delayed if gasoline becomes even more scarce.
(Reporting by Tim Kelly, Isabel Reynolds, Kentaro Sugiyama and James Topham; Editing by Edwina Gibbs and Vinu Pilakkott)
How Japan is affecting the global supply chain
Justin Sullivan/Getty Images
From Apple Inc’s new iPad to Chevrolet pick-ups, concern is spreading down the global manufacturing supply chain about the impact of Japan’s earthquake
Mar 18, 2011 – 10:14 AM ET | Last Updated: Mar 18, 2011 12:17 PM ET
MADRID/PARIS – From Apple Inc’s new iPad to Chevrolet pick-ups, concern is spreading down the global manufacturing supply chain about the impact of Japan’s earthquake last week.
Plant shutdowns across Japan following the earthquake, tsunami and nuclear crisis threaten supplies of everything from semiconductors to car parts for manufacturers across the globe.
Even where factories in Japan are operating, power outages, shortages of fuel and raw materials and ruptured logistics mean products and parts face delays in getting to customers.
Honda Motor Co said on Friday it had extended a production halt in Japan, where it makes over a fifth of its cars, for another three days to next Wednesday.
And in a sign that the European manufacturers are also starting to feel the squeeze, carmakers Renault and Opel warned they would have to reduce production.
Opel, the European arm of General Motors, called a 24-hour production stop for next Monday and an eight-hour halt next Friday at its plant in Saragossa, Spain, due to the lack of an electronic item which had not arrived from Japan. Unions say about 2,400 cars will not be made during the stoppage.
Renault said it would cut output at its factory in Busan, South Korea, by 15 to 20 percent after disruptions to Japanese supplies mainly affecting the Renault-owned Samsung. The factory normally produces 20,000 vehicles per month.
“Production should go down by 15 to 20 percent, corresponding to 3,000 fewer cars,” said a Renault spokesman. “We hope a solution will be found rapidly.”
Japan’s grip on the global electronics supply chain is causing particular concern. The world’s third-biggest economy exported 7.2 trillion yen ($91.3 billion) worth of electronic parts last year, according to Mirae Asset Securities.
“Should the Japan crisis be prolonged, I expect a shortage of electronic parts in the second quarter,” said James Song, an analyst at Daewoo Securities, noting Japan provides 57 percent of the world’s wafers, used to make the chips that go into mobiles phones, cameras and other electronic devices.
Apple may face shortages of key parts for its newly released iPad 2, according to research firm IHS iSuppli. Several parts of the new version of the popular iPad tablet PC come from Japan, including the battery and the flash memory used to store music and video on the device.
Toshiba Corp one of the companies that produces the NAND flash memory used in the iPad 2, according to IHS iSuppli’s research, briefly shut a flash memory facility in Japan and warned it could face problems getting raw materials.
Memory chip industry tracker DRAMeXchange said it had seen a panic surge in NAND flash spot prices and a 5 to 15 percent rise in the contract average selling price. It said it expected the earthquake to cut global NAND flash supply by up to 4 percent in the second quarter, in terms of the amount of memory available.
Goldman Sachs warned of potential bottlenecks in the supply of silicon wafers, conductive film used in LCD circuits and resin used to connect chips to boards — products made by Japanese companies such as Shin Etsu and divisions of Sony, Hitachi and Mitsubishi.
In France, the head of a small electronics firm that aims to compete with Apple in the tablet market by making cheap devices for emerging markets, warned of a knock-on effect via China.
“We don’t have any direct suppliers in Japan but some of our Chinese partners may be exposed to the country,” Archos Chief Executive Henri Crohas said.
Japan’s top car makers including Toyota Motor Co and Nissan Motor Co are struggling to restart output amid a shortage of parts, labour and power. GM said it would temporarily idle a pick-up truck plant in Louisiana, where it builds the Chevrolet Colorado and GMC Canyon models, due to a parts shortage.
“Like all global automakers, we will continue to follow the events in Japan closely to determine the business impact,” GM said in a statement on Thursday.
North American output is likely to be affected unless Japanese suppliers revive their plants and send parts within 10 days, Wolfe Trahan & Co analyst Tim Denoyer said in a note.
Japanese company Jamco that makes galleys for the long-awaited Boeing BA.N 787 Dreamliner, said it could face delivery delays due to scarce gasoline supplies.
Airline industry body IATA said Japan produces 3 to 4 percent of global jet fuel supply and warned part of this capacity had been lost. “This supply restriction could lead to higher jet fuel prices,” it said.
Lufthansa Cargo, which moves electronics, liquid crystals for flat screen displays and pharmaceuticals out of Japan, said it may be forced to cancel some flights next week.
“The booking situation from Germany is good and from Japan it is still pretty good as well,” a spokesman said. “But it is slowly becoming noticeable that production is slowing in Japan.”
Denmark’s Novo Nordisk, the world’s biggest insulin producer, has suffered disruption at its Koriyama plant, where only 10 percent of the normal 100-strong workforce are still on site. Novo said it was continuing to ship insulin from Koriyama and distribution centres were well stocked.
GlaxoSmithKline said its drug factory at Imaichi had suffered minor damage and was out of action, but the company expects it to resume operations soon. In the same sector Switzerland’s Roche was assessing the situation at one plant in Utsunomiya that had temporarily halted production and would investigate any supply chain problems. It said the site was not affected by any serious damage.
As Japan battles to recover from the recent earthquake and tsunami, the first evidence is emerging of damage to world economic activity.
Global manufacturers are starting to feel the squeeze on supply of parts from Japan.
Production is being affected, with General Motors (GM) and Boeing reporting difficulties - and Apple could be the next in line.
Plant shutdowns across Japan threaten supplies of everything from semiconductors to car parts and where factories are still operating they are being affected by fuel shortages and power outages.
The largest car-maker in the US, GM, has temporarily halted work at its Louisiana truck plant due to a parts shortage.
"Like all global automakers, we will continue to follow the events in Japan closely to determine the business impact" said GM in a statement.
And, according to a report from research firm IHS iSuppli, Apple may face shortages of key elements for the iPad 2.
Five parts for the device are made in Japan, including the battery and the flash memory used to store music and video on the device.
These difficulties are likely to exacerbate Apple's supply problems, with many stores selling out of the iPad 2 within hours of its US launch.
As such analysts are suggesting that the shortages could cause a fall in Apple's revenues of around 1% for the quarter.
And aircraft-maker Boeing is deciding how to deal with a possible shortfall in parts - nearly one third of the elements for the forthcoming 787 Dreamliner come from the country.
Boeing told the Wall Street Journal it has "identified points of risk within the supply chain and developing mitigation plans."
And according to analyst Tim Denoyer, unless Japanese suppliers revive their plants and send parts within the next 10 days, the problem will become acute.
UPDATE 4-Supply concerns grow as Japan lacks parts, power
* Honda extends Japan output halt; GM idles U.S. plant
* Apple may face parts delays for iPad 2 - iSuppli
* European carmakers Renault and Opel start to feel pinch
* Flash memory spot prices surge - industry tracker
* Airline body IATA warns of higher jet fuel prices
(Changes dateline and byline, adds GM's Opel unit, Renault, GlaxoSmithKline, Roche, IATA, NAND flash spot prices)
By Robert Hetz and Gilles Guillaume
MADRID/PARIS, March 18 (Reuters) - From Apple Inc's (AAPL.O) new iPad to Chevrolet pick-ups, concern is spreading down the global manufacturing supply chain about the impact of Japan's earthquake last week.
Plant shutdowns across Japan following the earthquake, tsunami and nuclear crisis threaten supplies of everything from semiconductors to car parts for manufacturers across the globe.
Even where factories in Japan are operating, power outages, shortages of fuel and raw materials and ruptured logistics mean products and parts face delays in getting to customers.
Honda Motor Co (7267.T) said on Friday it had extended a production halt in Japan, where it makes over a fifth of its cars, for another three days to next Wednesday. [ID:nL3E7EI0NM]
And in a sign that the European manufacturers are also starting to feel the squeeze, carmakers Renault (RENA.PA) and Opel warned they would have to reduce production.
Opel, the European arm of General Motors (GM.N), called a 24-hour production stop for next Monday and an eight-hour halt next Friday at its plant in Saragossa, Spain, due to the lack of an electronic item which had not arrived from Japan. Unions say about 2,400 cars will not be made during the stoppage.
Renault said it would cut output at its factory in Busan, South Korea, by 15 to 20 percent after disruptions to Japanese supplies mainly affecting the Renault-owned Samsung SM7. The factory normally produces 20,000 vehicles per month.
"Production should go down by 15 to 20 percent, corresponding to 3,000 fewer cars," said a Renault spokesman. "We hope a solution will be found rapidly." [ID:nLDE72H1BU]
PARTS SHORTAGE
Japan's grip on the global electronics supply chain is causing particular concern. The world's third-biggest economy exported 7.2 trillion yen ($91.3 billion) worth of electronic parts last year, according to Mirae Asset Securities.
"Should the Japan crisis be prolonged, I expect a shortage of electronic parts in the second quarter," said James Song, an analyst at Daewoo Securities, noting Japan provides 57 percent of the world's wafers, used to make the chips that go into mobiles phones, cameras and other electronic devices.
Apple may face shortages of key parts for its newly released iPad 2, according to research firm IHS iSuppli. [ID:nN17232882]
Several parts of the new version of the popular iPad tablet PC come from Japan, including the battery and the flash memory used to store music and video on the device.
Toshiba Corp (6502.T), one of the companies that produces the NAND flash memory used in the iPad 2, according to IHS iSuppli's research, briefly shut a flash memory facility in Japan and warned it could face problems getting raw materials.
Memory chip industry tracker DRAMeXchange said it had seen a panic surge in NAND flash spot prices and a 5 to 15 percent rise in the contract average selling price. It said it expected the earthquake to cut global NAND flash supply by up to 4 percent in the second quarter, in terms of the amount of memory available.
Goldman Sachs warned of potential bottlenecks in the supply of silicon wafers, conductive film used in LCD circuits and resin used to connect chips to boards -- products made by Japanese companies such as Shin Etsu (4063.T) and divisions of Sony (6758.T), Hitachi (6501.T) and Mitsubishi (7280.T).
In France, the head of a small electronics firm that aims to compete with Apple in the tablet market by making cheap devices for emerging markets, warned of a knock-on effect via China.
"We don't have any direct suppliers in Japan but some of our Chinese partners may be exposed to the country," Archos (ARCH.PA) Chief Executive Henri Crohas said.
EVEN THE KITCHEN SINK
Japan's top car makers including Toyota Motor Co (7203.T) and Nissan Motor Co (7201.T) are struggling to restart output amid a shortage of parts, labour and power. [ID:nL3E7EG0J4]
GM said it would temporarily idle a pick-up truck plant in Louisiana, where it builds the Chevrolet Colorado and GMC Canyon models, due to a parts shortage.
"Like all global automakers, we will continue to follow the events in Japan closely to determine the business impact," GM said in a statement on Thursday. [ID:nN17262299]
North American output is likely to be affected unless Japanese suppliers revive their plants and send parts within 10 days, Wolfe Trahan & Co analyst Tim Denoyer said in a note.
Japanese company Jamco (7408.T) that makes galleys for the long-awaited Boeing (BA.N) 787 Dreamliner, said it could face delivery delays due to scarce gasoline supplies. [ID:nLDE72G2AF]
Airline industry body IATA said Japan produces 3 to 4 percent of global jet fuel supply and warned part of this capacity had been lost. "This supply restriction could lead to higher jet fuel prices," it said. [ID:nLDE72HOSO]
Lufthansa Cargo (LHAG.DE), which moves electronics, liquid crystals for flat screen displays and pharmaceuticals out of Japan, said it may be forced to cancel some flights next week.
"The booking situation from Germany is good and from Japan it is still pretty good as well," a spokesman said. "But it is slowly becoming noticeable that production is slowing in Japan."
Denmark's Novo Nordisk (NOVOb.CO), the world's biggest insulin producer, has suffered disruption at its Koriyama plant, where only 10 percent of the normal 100-strong workforce are still on site. Novo said it was continuing to ship insulin from Koriyama and distribution centres were well stocked.
GlaxoSmithKline (GSK.L) said its drug factory at Imaichi had suffered minor damage and was out of action, but the company expects it to resume operations soon. In the same sector Switzerland's Roche (ROG.VX) was assessing the situation at one plant in Utsunomiya that had temporarily halted production and would investigate any supply chain problems. It said the site was not affected by any serious damage. (Additional reporting by Alexei Oreskovicin, Isabel Reynolds, Miyoung Kim, Matthias Blamont, Florent Le Quintrec, Victoria Bryan, Ben Hirschler, Robert Hetz, Katie Reid, Andrew Callus, Georgina Prodhan; Writing by Ian Geoghegan, Tim Hepher and Sophie Walker; Editing by Lincoln Feast and David Holmes) ($1 = 78.855 Japanese Yen)
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