Latest Japanese Supply Chain Disruption Summary

Tyler Durden's picture

By now the only homo sapiens in the world who don't realize that the Japanese earthquake/tsunami/nuclear disaster will have profound implications on supply chains, inventory levels, profit margins, corporate bottom lines and broad economic output are Wall Street sell side analysts, who remain convinced that the Lemming view is the right one, at least until management teams start coming out, most likely in the upcoming week, and issuing profit warnings, conveniently blaming their declining profitability on Japan, the weather and other "one time items." In fact, in the old tried and true mentality of "he who defects first, loses the least" and the even trieder and truer mentality of "never let a crisis go to waste" we may suddenly see a scramble of management teams taking advantage of the economic adversity posed by Japan to buffer their own declining margins, therefore buying them at least a quarter before the market realizes that the entire QE2 inspired "golden age" is now over. After all, one would be stupid not to blame an event which most will perceive as non-recurring, thereby eliminating its follow through to the top and the bottom line in future quarters and minimizing the impact on the stock price. So while corporate treasurers and CFOs are wording their press releases appropriately, which we expect will start hitting the tape as soon as tomorrow, here is the most recent recap of known auto and electronic-maker disruptions as reported by Reuters.

Following is a roundup of the impact of this
month's devastating earthquake and tsunami on Japanese manufacturers of
cars and electronics.

Plant shutdowns in Japan threaten supplies to manufacturers across the globe of items from semiconductors to car parts.

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

AUTO MAKERS

* Toyota Motor Corp
halted most operations at 18 factories that assemble Toyota and Lexus
vehicles in Japan. It has restarted production of three hybrid models,
the Prius, Lexus HS250h and CT200h, from March 28 at two factories but
will suspend output for one day this week, on March 30. Toyota is making
car parts at plants near its base in Toyota City, central Japan, for
overseas assembly facilities and for repair parts. Toyota will delay the
launch of the Prius wagon and minivan models in Japan from the original
plan for the end of April.

* Honda Motor Co extended its
production halt in Japan to April 3. On Monday, Honda said a fifth of
its Japan-based Tier 1 suppliers affected by the earthquake 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. On Thursday
the company said it would resume production of motorcycles and power
products at its Kumamoto plant in Kyushu, southern Japan.

*
Nissan Motor Co
resumed vehicle production at all assembly plants in
Japan from Thursday, March 24, while supplies last. It resumed
production of parts for overseas manufacturing and repair parts on March
21. Restoration continues at its damaged Iwaki engine factory in
Tochigi prefecture, north of Tokyo. 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 Nissan about 2
billion yen ($25 million) in profit.

* Mazda Motor Corp said on
Thursday it would suspend production of vehicle repair parts and parts
for overseas production at its Hofu factory in Yamaguchi on March 28,
after having resumed limited operations there earlier this week. Its
Hiroshima factory will continue limited production until further notice,
a spokeswoman said.

* Suzuki Motor Corp will keep car production
halted at its three assembly plants in Japan through March 29, and
resume assembly of commercial trucks and vans at one of those plants for
one shift on March 28 and 29. It will continue operating an engine
factory using parts in its inventory. It has not decided on production
plans for March 30 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 Monday, pushing back a restart that had been due on Tuesday.
Production of vehicle parts to be shipped to overseas manufacturing
plants started on Wednesday and production of vehicle repair parts began
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.

* Toshiba said output was suspended at a factory in
Iwate prefecture making system LSI chips for microprocessors and image
sensors, with no time frame yet for a resumption of output. 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 it re-started operations at two plants on Friday, but two
camera plants remained closed and the company was not sure which
factories it would be able to operate next week, amid a shortage of parts.

* Panasonic said some plants in northeast Japan remained closed
including one making optical pick-ups and another assembling cameras and
audio equipment.

* Renesas Electronics, the world's No.5
chipmaker, said production at three of its 22 factories in Japan is
still halted while output at three other assembly plants has been
affected by power outages imposed by utilities unable to meet
electricity demand in the wake of the earthquake.

OTHERS


* Shin-Etsu Chemical
, the world's leading maker of silicon wafers,
said its biggest wafer plant remained offline, along with a PVC factory.
The firm has not said 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.