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Quake shocks Japan’s economy
TOKYO (AP) — The mammoth earthquake that ravaged northern Japan this week did more than take lives and trigger radioactive leaks. It damaged some of the most important industries undergirding growth in the world's second-biggest economy.
Details of the economic fallout were still emerging days after Monday's 6.8-magnitude earthquake shook the Sea of Japan coast. But early repercussions stretched from Japan's top automakers to the country's biggest power company.
"We will work to the utmost to avoid damage to the economy," Chief Cabinet Secretary Yasuhisa Shiozaki said yesterday. "For the factories that suspended operations, the related ministries are striving hard for their early resumption."
The quake, which killed 10 persons and caused a number of problems at the world's biggest nuclear plant, including a fire and leaks of radioactive material into the ocean, has wreaked havoc on companies with factories in the region and created a logistics nightmare with damaged roads.
As of yesterday, Toyota, Nissan, Honda, Mitsubishi, Mazda and Fuji Heavy Industries, the maker of Subaru vehicles, halted production at some factories because a key parts supplier, Riken Corp., was damaged by the temblor.
The Nikkei business newspaper reported that about 70 percent of Japan's domestic auto production was interrupted because of the quake.
Meanwhile, fears of an electricity shortage in the nation's capital swelled after the nuclear power plant was shut down indefinitely because of safety concerns. Tokyo Electric Power Co. (TEPCO), Japan's largest utility, was scrambling to restore conventional power output after closing the quake-damaged Kashiwazaka-Karima facility in Niigata prefecture, in north-central Japan.
Autos and electric power are key to Japan's export-oriented economy, which is staging a healthy recovery after more than a decade of doldrums. While any lasting impact on overall growth will likely be limited, even a small blip would be unwelcome.
"Naturally the impact will be negative, but the government will likely increase spending in public works to repair bridges and roads so there should be some offsetting effects," said Masaaki Kanno, chief economist at JP Morgan in Tokyo.
Japanese stocks bounced back yesterday from two days of declines, with the benchmark Nikkei 225 index gaining 0.56 percent. Toyota and Nissan rose, but TEPCO shares tumbled 5.6 percent to $27.88, bringing its losses since its last close before the quake to 10.3 percent.
The auto companies' troubles stemmed largely from damage at a factory run by Riken, a supplier of key transmission and engine parts.
Riken said about 80 percent of the damage had been repaired as of yesterday afternoon and that it was hoping to restart early next week.
Still, analysts said the delay — if short enough — probably wouldn't affect domestic or overseas deliveries for big names such as Toyota, which has enough inventory to cover a few days of lost output.
Elsewhere in the quake zone, Fuji Xerox Co. halted a damaged printer plant.
For Sanyo Electric Co., yesterday's rumble was a close call.
In 2004, one of its semiconductor plants in the region was hit by an earthquake that also registered 6.8 magnitude. That ended up hurting the company's earnings.
Sanyo briefly closed the plant again after Monday's quake but reopened it after determining there was no damage. Any financial impact this time would be minimal, it said in a statement.
Of wider concern was an impending electricity crunch.
TEPCO warned Wednesday that the closure of its seven-reactor Kashiwazaka-Karima plant, which provides up to 13 percent of the utility's total electricity output, could trigger a power shortage for the busy capital in the summer months.
The company was considering bringing six retired thermal power generators into operation to prepare for a surge in demand as people turn up their air conditioners.
The utility has also asked six other Japanese power companies to sell it emergency electricity from late July through the end of September.
"We are working hard to prevent the worst case scenario — an energy shortage," company spokesman Shogo Fukuda said yesterday. "We would also call on our customers to redouble their energy-saving efforts."
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