By E. Wasserman
Japan’s worst earthquake and tsunami ever has shuttered auto, electronics and other manufacturing plants in that country Monday, and experts warn that the impacts are likely to ripple through the global economy.
Operations at Toyota, Sony, Toshiba and several other major Japanese manufacturers have ground to a halt as the country grapples with the growing humanitarian and nuclear crises.
Sony, Japan’s largest consumer electronics exporter, said in a statement Monday that while only its Sendai Technology Center sustained earthquake damage, the company has temporarily and voluntarily closed a half dozen plants in other parts of the country due to widespread power outages.
Those plants, the company said, make a variety of electronic equipment and components, from Blu-ray discs and optical devices to semiconductor lasers and lithium-ion batteries.
Toyota said that while there were no injuries at the company’s facilities, operations at several plants that produce parts and vehicles have been temporarily suspended, including the Kanto Auto Works Iwate plant, which produces the Scion xB and Scion xD, and the Miyagi plant, which makes the Yaris model.
Toshiba Corp., a large exporter of computer chips, said Monday that it will cooperate with Tokyo Electric Power Company’s request to cut electricity consumption in Japan by operating only essential services. The company Monday closed all of its premises in areas with power outages, aside from its headquarters and essential business operations.
In Japan, stocks also were hammered Monday, with the Nikkei index ending down by more than 6 percent, as investors reacted to last week’s massive earthquake.
The earthquake and an ensuing tsunami devastated much of the country’s northeastern region and left several nuclear power plants in peril, leaving wide swaths of the nation without electricity.
“Because of this nuclear meltdown, I suspect Japan is going to be shut down a lot longer,” said Peter Morici, a business professor at the University of Maryland and former chief economist at the U.S. International Trade Commission.
Japan is one of the world’s largest exporters – behind a handful of nations such as China, the U.S. and Germany – and exported $781 billion in goods in 2008, according to the Organisation for Economic Co-operation and Development (OECD).
Many of Japan’s largest exporters have expanded operations abroad, including in the United States, as the Asian nation has faced internal economic pressures and as its population ages. Some experts believe that the earthquake and its aftermath will accelerate that trend.
“Japan is destined to shrink unless they do something about the population problem, but this may accelerate the process of industry going elsewhere,” Morici said. “Any of the companies that really have a global brand and special technical expertise – such as Sony and Toyota – this is going to accelerate the process of expanding someplace else.”
However, don’t look for that expansion to take place in the U.S., he added. “If things were better here, yes,” Morici added. “China is likely to be the winner in all of this.”
Other nations have rebounded from natural disasters in years past. But in a larger country, such as the United States, a disaster such as Hurricane Katrina could devastate one region and businesses might relocate to another area.
However, Japan has a history of devastating quakes and has a large reliance on nuclear energy to fuel its economic engine.
“If it wasn’t for the nuclear power situation, a year from now it would not be as large as you would think,” said Morici. “If Toyota shuts down for two weeks, they can probably make up production for the model year and not lose much output.”
The nuclear crisis, however, likely changes that forecast.
{Capitol News Company/Matzav.com Newscenter}
