Automakers, electronics firms and oil refiners all close important plants as economy suffers
automakers, electronics firms and oil refiners shut key factories after a
massive earthquake and tsunami struck the northeast coast, underscoring
the challenge facing the government as it rushes to limit the economic
Electronics giant Sony Corp has
suspended operations at eight factories including one making optical
film that was flooded by the tsunami triggered by Friday's 8.9-magnitude
quake. Nissan Motor halted output at all four of its domestic assembly
factories and said restarting them could depend on whether it can get
These are just two in a long
list of companies unsure of how quickly they can get their plants back
up and running. The widespread damage to infrastructure as well as power
rationing after an accident at a nuclear plant could also hamper
efforts to resume shipments, even if factory equipment is intact.
say Japan's economy will suffer only a temporary setback from the quake
and could bounce back in a matter of months once spending on the
rebuilding efforts starts to kick in.
major technology and auto exporters are expected to be among the
hardest hit shares when financial markets open on Monday, reflecting
worries over the potential disruption to output and pressure on profits
over the short-term. Construction firms, which will benefit from the
rebuilding, are set to gain.
are worried about the infrastructure -- roads, trains, buses, trucks.
Not only are the things that get produced going to be delayed but the
materials you need to get them produced are going to be delayed. It's
going to bump everything a quarter or two," said Brian Heywood, CEO of
Taiyo Pacific Partners, which has $2 billion invested Japanese shares.
"Everyone is going to miss their numbers in the short-term."
beleaguered government is struggling to respond to what has developed
into the country's biggest crisis since World War 2. More than 10,000
people may have been killed, almost 2 million people are still without
power and another 1.4 million without running water, media said.
are pushing for an emergency budget for relief and reconstruction but
the outlay will likely be constrained by the country's huge public debt,
currently twice the size of the $5 trillion economy and growing. Japan
spent about 3 trillion yen after the Kobe earthquake of 1995, which
caused about $100 billion in damage.
of Japan Governor Masaaki Shirakawa said the central bank would provide
huge amounts of liquidity to the banking system on Monday to stabilize
markets after the quake.
investors might rush to sell Japanese shares from tomorrow, but
investors are also closely watching how quickly and firmly Japan can
react to a crisis like this," said Shinichi Ichikawa, chief market
strategist at Credit Suisse Securities.
the Japanese government to show strong leadership is absolutely
necessary to regain investors' confidence in its economy and market,
especially when the global economy is on track for a recovery led by the
Motor Co, the world's largest automaker, has halted production at all
12 of its domestic factories in Japan and has not been able to inspect
those in the affected area.
Corp said continuing aftershocks were preventing it from inspecting two
factories in northern Japan, one making electronic parts and another
digital cameras and audio equipment. It said a lack of proper power and
water supply was a potential bottleneck.
Securing a stable power supply relatively cheaply could prove to be a major hurdle for companies, analysts said.
Tokyo Electric Power, which is fighting to
avert a meltdown at its Fukushima plant, said it would cut supply
through its first-ever rolling blackout from Monday. It hopes to end the
blackouts by the end of April.
A fire at a Cosmo Oil refinery which had not been extinguished by Sunday is another concern.
would say the biggest risk is power," Takuji Okubo, chief Japan
economist at Societe Generale, told Reuters Insider TV.
risk is the potential strengthening of the yen, which is already
hovering near a 16-year high against the dollar, threatening the profits
of exporters, one of the key pillars of the Japanese economy.
The yen rose sharply in the wake of the Kobe earthquake as corporations repatriated funds to cope with the disaster.
yen could have a ripple effect," Taiyo Pacific's Heywood said. "A
strengthening yen could put untimely and unneeded financial pressure on
companies that are heavily dependent on overseas sales."
The horrendous force of the Tsunami in Japan has rubbled entire townships. The pictures in the press and the television are vivid, astonishing and chilling. Large ships, tall buildings, manifold trucks and cars have been tossed around, as if they were small toys. The Japanese people are undergoing severe suffering and trauma. My deepest sympathies to those who have lost their families, friends, homes.
Due to the intensive advance preparations of the Japanese Government and Japanese people and their responsible and dignified post-disaster management, many lives must have been saved. I saw on TV live images, of how calmly evacuated people were being given packets of food and blankets and moved to safer areas. The entire mission was being accomplished with great calm and stoic. Congratulations to the Japanese people for the responsible manner in which they are managing this great crisis.
We hope everyone in the world will do their best to help Japan,