Auto, Electronics Industries Face Supply Disruptions After Japan Earthquakes

Japan earthquakes laperladilabuan/Adobe Stock

The recent earthquakes in Japan have disrupted supply chains across several industries, including major auto manufacturers and electronics suppliers that have shut down operations in the country.

A magnitude-6.4 quake first hit near Kumamoto, Japan, late last week with a magnitude-7.3 quake following two days later. The two quakes were the biggest to hit the country since 2011 and killed more than 40 people.

Auto Makers Shut Down Plants

Toyota, Honda and Nissan shut down some Japanese production plants over the weekend, and some will keep them closed for the rest of the week. Toyota closed 26 car assembly plants across Japan after two of its suppliers experienced damage at their factories. Experts say the shutdown will likely last for two weeks or longer. The long shutdown highlights the tradeoffs of Toyota’s just-in-time inventory system, which keeps as little inventory as possible on hand to reduce storage costs, The Wall Street Journal reported.

Other automakers stopped production in Japan but for shorter periods than Toyota. Honda closed its motorbike plant in Kumamoto over the weekend and is expected to stay closed through Friday. However, the car maker has kept other production plants open that are not near the sites of the earthquakes. Nissan shut down its plant in Kyushu, Japan, south of Kumamoto over the weekend, but was back up and running on Monday.

Electronics Industry Disruptions

The earthquakes also strained the electronics industry supply chain. Sony’s plant in Kumamoto closed over the weekend, which could prove detrimental over time to the smartphone supply chain. The Sony plant supplies metal-oxide semiconductor image sensors for smartphone makers, including Apple. A Sony spokesperson, however, told Reuters the company has an inventory that can feed the supply chain at the moment, but would announce when and if a supply issue emerged.

Renesas Electronics Corp also closed its plant in Kumamoto. The plant makes microcontroller chips for cars. It is unclear when the plant will reopen. Mitsubishi was also affected, closing two plants near the quakes that manufactures liquid crystal display modules used in car navigation system display panels as well semiconductor chips used for power inverters in air conditioners and other electronics.

Details of Damage

Many of the companies operating in Japan are accessing the damage of the quakes and conducting safety checks to determine exactly how long production and supply chains may be impacted. Nearly 500 tremors have been recorded since the first quake struck the country. About 110,000 people are displaced in Japan due to the quakes and 250,000 are without water. Rescue efforts are underway but are being hindered by heavy rain in the region and mudslides. Additionally, more than 90,000 people were reportedly evacuated in the area around the quakes.

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