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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.

 

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Sun, 03/27/2011 - 22:17 | 1107244 Id fight Gandhi
Id fight Gandhi's picture

So this will help stocks rally somehow.

Only numbers that matter is how much free fed money there is. All the rest is just a waste of time anymore.

I miss the free markets and price discovery.

Sun, 03/27/2011 - 22:47 | 1107330 Lord Welligton
Lord Welligton's picture

Exactly.

Keep printing the money and nobody will notice until there is no food on the table.

In the meantime just keep up with the Stars Dancing On Ice.

Mon, 03/28/2011 - 02:12 | 1107761 Yen Cross
Yen Cross's picture

My Lord. The money printinting will end soon. Money Penny creates a well read scenario. Any querry is welcome?

Mon, 03/28/2011 - 04:06 | 1107873 A Man without Q...
A Man without Qualities's picture

I think I've got it figured - stagflation is good for equities because prices are rising, but sales are falling, so you have the goods sitting on the shelves making money through the inflationary effect.  Cool.

Mon, 03/28/2011 - 03:01 | 1107803 Dave
Dave's picture

Ford and GM might rally.

Mon, 03/28/2011 - 03:18 | 1107822 Yen Cross
Yen Cross's picture

GM stock?

Mon, 03/28/2011 - 05:44 | 1107926 Dave
Dave's picture

Well, maybe. Sell Nissan, buy GM. I wouldn't touch it but somebody might.

Mon, 03/28/2011 - 12:30 | 1109049 Carl Spackler
Carl Spackler's picture
  • GM and Ford are just as vulnerable

If you don't have 100% of the parts, you cannot build the car.

GM and Ford also use a lot of Japanese parts...specialty steel components, electronics, etc.  So they are just as hamstrung.

6 weeks id the key number...if the suppliers in Japan are still offline around May 1, then the global auto industry shuts down until further notice.

 

 

 

Sun, 03/27/2011 - 22:16 | 1107245 Backspin
Backspin's picture

That opening sentence was 161 words!

Sun, 03/27/2011 - 22:17 | 1107248 Id fight Gandhi
Id fight Gandhi's picture

I like how he writes. It's colorful, snarky and intelligent.

Sun, 03/27/2011 - 22:22 | 1107265 Rusty Shorts
Rusty Shorts's picture

Mark Twain. His sentences ran on since eight day clocks.

Sun, 03/27/2011 - 22:20 | 1107256 RollinRavenPurple
RollinRavenPurple's picture

I had Tyler at 84.  TD was just a little excited.  

Sun, 03/27/2011 - 22:27 | 1107274 Tyler Durden
Tyler Durden's picture

Sean Corrigan is still in the lead with a one sentence paragraph of +/- 280 words.

Mon, 03/28/2011 - 01:01 | 1107664 TemporalFlashback
TemporalFlashback's picture

TD - The people demand a one sentence paragraph of 300+ words.

Mon, 03/28/2011 - 02:46 | 1107794 StychoKiller
StychoKiller's picture

Inflation in the size of sentences...Deflation in the meaning of sentences! :>(

Sun, 03/27/2011 - 22:17 | 1107251 buzzsaw99
buzzsaw99's picture

bullish.

Mon, 03/28/2011 - 00:55 | 1107644 Yen Cross
Yen Cross's picture

equal

Mon, 03/28/2011 - 01:44 | 1107716 Threeggg
Threeggg's picture

winning !

Sun, 03/27/2011 - 22:19 | 1107252 Rusty Shorts
Rusty Shorts's picture

 - listen carefully to what he is saying

http://www.youtube.com/watch?v=DocdrgnrDns&NR=1

 

 - here's a hi-jacked video

http://www.youtube.com/watch?v=TUZaU_WkMao

Mon, 03/28/2011 - 00:32 | 1107432 uno2well
uno2well's picture

I loved the part at about 8:20 into the first video where he details the order of the evacuation. The whole lot of them have bugged out! but stay calm, don't panic... "We will continue to support our Japanese partners" (just not from this fucking toxic wasteland/island) Don't panic!

 

 

Sun, 03/27/2011 - 22:18 | 1107253 disabledvet
disabledvet's picture

first off "thank you zero hedge."  everyone else "bought into the bullshit"--only here did you get the real deal.  extraordinary.  just as important and a significant change in the world of ZH is an understanding of the "saliency" of these matters.  the average CNBC or Bloomberg bloke "shrugs his shoulders at the significance of Japan anyways."  As all you know of me and now of Zero Hege "that is not either of us."  Events halfway around the world have an immediate impact on economies.  Don't even get me started on "Libya" though I'd be more than happy to get started on "Dick Tator and his Tator Tots" of course.  Great stuff.

Mon, 03/28/2011 - 03:54 | 1107867 Yen Cross
Yen Cross's picture

Enlighten me Disabled Vet? Don't be an un-spoken VOICE! BITCH!!

Sun, 03/27/2011 - 22:18 | 1107254 99er
Mon, 03/28/2011 - 00:56 | 1107645 Yen Cross
Yen Cross's picture

NI225 is boring. I used to watch it. Too many Kampo MOMMIES!

Sun, 03/27/2011 - 22:19 | 1107260 bud-wiser
bud-wiser's picture

Slightly off topic, but here is independent verification of Fukushima radiation, worldwide:

http://www.dw-world.de/dw/article/0,1564,14938445,00.html?maca=en-newsletter_en_bulletin-2097-html-nl

Mon, 03/28/2011 - 00:56 | 1107652 Yen Cross
Yen Cross's picture

Ceramic vessels with lots of carbonation?

Sun, 03/27/2011 - 22:21 | 1107262 colorfulbliss
colorfulbliss's picture

If shortages continue, Sony may consider temporarily shifting some production overseas.

This is most definately bullish. With America's lax regulations, low labor cost and highly technically skilled workforce, I'm sure we will be the first choice.

 

/sarc 

Mon, 03/28/2011 - 01:56 | 1107739 Yen Cross
Yen Cross's picture

Thanks and noticed. We keep track. Good job.

Mon, 03/28/2011 - 03:01 | 1107806 Mentaliusanything
Mentaliusanything's picture

Ah please read between lines momosan. It going to take f#@king years to restore production in Japan.

This is not a move any company does without carefully crunching all the facts and its expensive and time consuming

 

 

 

 

Sun, 03/27/2011 - 22:20 | 1107263 Larry Darrell
Larry Darrell's picture

And this is just the "big 2" of cars and electronics.

We do work for American Fuji Seal here in the US. While I was there last week they said that 3 of their plants in Japan were still down.  AFS makes plastic containers and labels for almost every product you've ever seen on a supermarket shelf.

Sun, 03/27/2011 - 22:25 | 1107267 Youri Carma
Youri Carma's picture
Jim Willie Archived Audio - Willie always Good Stuff! http://www.contraryinvestorscafe.com/jim-willie-radio/
Sun, 03/27/2011 - 22:32 | 1107278 Count Laszlo
Count Laszlo's picture

I'm bored. Can't get that car in the color I want and Apple is out of the iPad2. Maybe I'll just watch a lot of TV, buy a ton of iTunes, and maybe watch two or three more movies than normal at the local theater. And afterwards, dinner.

Sun, 03/27/2011 - 22:30 | 1107280 Captain Benny
Captain Benny's picture

For those that don't know what optical pickup units (OPUs) are, they're used in your computer's optical drive to read the disc.  They're mandatory components and they're pretty high precision components.  This is a great video to reference on OPUs: http://www.mathworks.com/products/demos/slcontrol/dvd_control/

 

Sun, 03/27/2011 - 22:30 | 1107283 Bicycle Repairman
Bicycle Repairman's picture

"before the market realizes that the entire QE2 inspired "golden age" is now over"

 

It's over? Really?

Sun, 03/27/2011 - 22:34 | 1107292 Count Laszlo
Count Laszlo's picture

It's far from over my friend. Two is the new ten.

Sun, 03/27/2011 - 22:40 | 1107318 Tyler Durden
Tyler Durden's picture

Nothing about the QE 3-666 inspired golden age.

Mon, 03/28/2011 - 00:31 | 1107600 plata pura
plata pura's picture

Foking math questions on this here thread silences us hill billy folk. As far as the Jekyll Isle cartel be concerned; it be all figured in.

Sun, 03/27/2011 - 22:34 | 1107294 monopoly
monopoly's picture

And this is what is important. We all have a car or two, a computer, a flat panel TV, and a camera. But we must continue to consume, or else it all falls down. At some point, it Will, all fall down.  Consumer sentiment moving lower I see. Well, we will just give out more free money and the stock market will continue on its upward move.

I am so sick of this phony market. I too would love to see a free market. Might be to old to see that again.

 

Sun, 03/27/2011 - 22:36 | 1107296 Bleeping Fed
Bleeping Fed's picture

Going long aftermarket OEM Toyota and Honda parts.

Sun, 03/27/2011 - 22:55 | 1107345 DoChenRollingBearing
DoChenRollingBearing's picture

That is exactly what we are trying to do here in Peru.  Our bearing supplier in S. Japan has not responded to our emails...  Most bearing plants are in southern and central Japan I believe, yet we have heard nothing.

When Japanese (or Korean) alternatives become available, we will be buying BIG.  None of this JIT crapola for us.  We will spend more on inventory.

Mon, 03/28/2011 - 06:44 | 1107957 A Man without Q...
A Man without Qualities's picture

Reminds me how the Royal Air Force realized that carpet bombing German cities really didn't do much to effect the Nazi's ability to fight war.  They finally broke off from the American strategy of dropping volume over a wide area, and switched to flying small, fast aircraft, which would specifically target ball bearing factories.  Doesn't matter what else you have, you can't make machines without ball bearings.  I suppose the Japanese are going to keep all components domestically, to make sure they have what they need... but it sucks for their loyal overseas customers.

On a wider point, Japanese industry has been forced to become highly specialized in order to survive currency fluctuations and Chinese piracy, which means in many cases, there are no alternative sources and all it takes is one missing vital component and it won't work.  

However, our trusty guardians in the central banks will unleash a tsunami of liquidity to wash any problems away.

Sun, 03/27/2011 - 22:38 | 1107301 Youri Carma
Youri Carma's picture

15 March 2011: Bank of Japan injects $245 bln into markets http://www.marketwatch.com/story/bank-of-japan-injects-245-bln-into-markets-2011-03-15

14 March 2011: Bank of Japan adds $61 billion liquidity: report http://www.marketwatch.com/story/bank-of-japan-adds-61-billion-liquidity-report-2011-03-14

Sun, 03/27/2011 - 22:38 | 1107312 SqueekyFromm
SqueekyFromm's picture

Well, thank goodness Yamaha wasn't on that list, which means their guitars will keep coming.  Plus, Ibanez and Fernandes weren't on the list either.

Squeeky Fromm, Girl Reporter

Sun, 03/27/2011 - 22:47 | 1107326 Rusty Shorts
Rusty Shorts's picture

lmao ... no wait

Sun, 03/27/2011 - 22:54 | 1107342 knukles
knukles's picture

Mildly disturbing.

Mon, 03/28/2011 - 01:36 | 1107712 SqueekyFromm
SqueekyFromm's picture

Well, I don't have one of those Silent Guitars yet. But somehow I have winded up with 4 Yamahas and I have only been playing less than a few months. I guess I got carried away at the pawn shops. But the 12-string has the prettiest little bird on it. 

Squeeky Fromm, Girl Reporter

Mon, 03/28/2011 - 02:26 | 1107777 TheMerryPrankster
TheMerryPrankster's picture

whats a good price for a pawn shop Yamaha guitar? I need an accoustic.

Mon, 03/28/2011 - 03:12 | 1107816 Dave
Dave's picture

Depends on the guitar. I found a Yamaha FG 150 in perfect condition and paid $50. Checked the internet and they averaged $350. Ya never know...

Mon, 03/28/2011 - 05:29 | 1107914 Dave
Dave's picture

Squeeky, what is a silent guitar?

Sun, 03/27/2011 - 23:15 | 1107407 JohnnyCrash
JohnnyCrash's picture

Most good Yamahas come from Taiwan. Ibanez and Fernandez mostly Indonesia with some top models some years from Korea.

Anymore, Japan like US only makes high priced boutique guitars. The Made in Japan mass market guitars were great, while it lasted.

Geen vegetables and water are probably more at issue at the moment.

Sun, 03/27/2011 - 22:48 | 1107333 avonaltendorf
avonaltendorf's picture

787

Mon, 03/28/2011 - 03:58 | 1107855 SHRAGS
SHRAGS's picture

Yes, I've been thinking about that one too.  Wikipedia lists japanese work at 35% of the aircraft 787.

The Seattle times has a good summary of the various suppliers of major components.

Boeing 787: Parts from around world will be swiftly integrated

This is going to be a major blow for our company, as we have one of the biggest orders for the aircraft, we could be SOL.

 

Mon, 03/28/2011 - 19:11 | 1110621 Dave
Dave's picture

Depends on where the 787 parts are made. The south of Japan is affected only minimally.

Sun, 03/27/2011 - 22:56 | 1107347 chump666
chump666's picture

The markets have detached from reality on Japan, so you got a major overbought rally kicking on, good barometer?  The AUD. A ridicules overbid from 0.97 when japan got K'oed to 1.02 

Japan supply disruption 6-12, any rally now when the country is still F******, is getting the s*** kicked out it...it's too early

Mon, 03/28/2011 - 05:39 | 1107923 Yen Cross
Yen Cross's picture

Central banks will  raise rates. AUD will get DRILLED into netherland.

Sun, 03/27/2011 - 22:57 | 1107353 tmosley
tmosley's picture

Eh, don't worry.  I have it on good authority from Trav and some Libtrolls that everything is fine and you guys are just a bunch of paranoid stupidheads.

 

Sun, 03/27/2011 - 23:26 | 1107444 DoChenRollingBearing
DoChenRollingBearing's picture

Aaaaaaggghhhhh!  THIS paranoid stupidhead does not know if we can even GET our bearings (Japanese or otherwise).  Our Korean suppliers might get dragged into supplying for Toyota or Mitsubishi, if that happens, we aftermarket bearing importers are toast.

Mon, 03/28/2011 - 03:17 | 1107823 Dave
Dave's picture

I guess you're bearing a heavy burden there DoChenRollingBearing

Mon, 03/28/2011 - 18:19 | 1110436 saulysw
saulysw's picture

Yes, your comment has bearing on the bear bearing market, which is not bearing up to the strains. Obviously, this is bullish. 

Sun, 03/27/2011 - 23:33 | 1107463 DoChenRollingBearing
DoChenRollingBearing's picture

MEMC Electronic Materials (ticker WFR) makes silicon wafers, may get a speculative bump up because their biggest competitor Shin-Etsu has had to close its big plant (mentioned by Tyler above).

Sun, 03/27/2011 - 23:39 | 1107487 Kassandra
Kassandra's picture

JIT....the next black swan lurking?  

Mon, 03/28/2011 - 02:36 | 1107783 TheMerryPrankster
TheMerryPrankster's picture

Just in time is a balancing act between too fucking much (tfm) and shit out of luck (sol), the longer the chain the more chances for things to fuck up. JIT will turn out to be only good for expensive things you don't really need, say diamonds fer example. not so good for stuff like water or food or gasoline.

This could be positive for warehousing and transport, if folks create a fatter supply chain.

Sun, 03/27/2011 - 23:40 | 1107492 camoes
camoes's picture

BTF Supply Shortage, bitchez

Sun, 03/27/2011 - 23:56 | 1107528 Yen Cross
Yen Cross's picture

600 K cars sitting 1/2 built on supply lines.

Mon, 03/28/2011 - 00:19 | 1107582 Yen Cross
Yen Cross's picture

The Koreans are giggling behind the scenes. Hyundai and Kia have already launched massive assaults on The Japanese car industry. They have some very good product, if I may add. Those recalls and yen strength have really opened that door for the Koreans. They aren't looking back either.

Mon, 03/28/2011 - 18:14 | 1110445 saulysw
saulysw's picture

All it will take is Kim Jong ill to fly in on his black swan and they will be toast too.

Mon, 03/28/2011 - 00:36 | 1107610 plata pura
plata pura's picture

These States United hold bouts 27% of the worlds wealth and whens supply gets a wedgie or whens folks here starts buying other goods and services the belligerent countries feel it and good.

Mon, 03/28/2011 - 00:59 | 1107659 Yen Cross
Yen Cross's picture

It's found wealth. Seems diamonds are coming out of our asses.

Mon, 03/28/2011 - 01:00 | 1107632 Oh regional Indian
Oh regional Indian's picture

JIT works till it does not. It's as simple as that. The whole premise of the system is the "taut string" hypothesis. It will only make music if the Chain (string) is tight. No margin for error.

Of course the failures are spectacular. In addition, every effort at cost cuttiing in a JIT scenario is to make the string even more taut.

As a guitar-ist, I know that if you tighten too much, or wait too long, taut strings pop, usually at bad, mid-performance moments.

The shocks from this Supply Chain disruption are only just beginning to make themselves known. It will spiral round and round, around the globe. 

Sad that the corner-stone of Globalization (infinite motility of goods and labour) is meeting it's end in such tragic circumstances, at the heart of where it all began.

ORI

http://aadivaahan.wordpress.com

Mon, 03/28/2011 - 03:24 | 1107829 Dave
Dave's picture

If they're too tight they're not in tune either.

Mon, 03/28/2011 - 01:22 | 1107692 ebworthen
ebworthen's picture

Just tell me that GOLD is going higher (lick, slurp)

Mon, 03/28/2011 - 01:40 | 1107715 onlooker
onlooker's picture

-------QE 3-666----- PRICELESS 

Mon, 03/28/2011 - 03:08 | 1107813 Urban Redneck
Urban Redneck's picture

Any information as to disruptions in the heavy industrial supply chain?  Semi conductors and consumer autos only impact those who what to drive to the apple store and eat an iPad.  I would be more concerned about the ability of suppliers to get oil, chemicals, gold and food out of the ground and into the marketplace. 

Mon, 03/28/2011 - 03:27 | 1107835 Highrev
Highrev's picture

Their competition is obviously going to benefit.

Mon, 03/28/2011 - 04:58 | 1107901 Arch Duke Ferdinand
Arch Duke Ferdinand's picture

...So where is it safe?

tia

Mon, 03/28/2011 - 05:38 | 1107920 Yen Cross
Yen Cross's picture

Time to Grow up Duke.

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