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Quake Further Inhibits Japan’s Already Weakened Electronic Manufacturing Companies

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The earthquake in Japan and subsequent tsunami has wiped out homes, taken lives, and made business anything but usual. The economic impact of the earthquake is being felt all over the world, especially in places like China, which receives 149.1 billion in exports from Japan each year. Immediately following the disaster, the cost of electronics rose sharply. The selling prices of iPads alone have shot up from 2,800 yuan to 3,300 yuan.

It is still too early to tell what economic ramifications the United States might suffer as a result of the quake. American exports won’t be affected since the States mainly export cereal and machinery to Japan, both of which are currently in high demand. However, as in China, the price of electronics manufactured in Japan may increase. (The iPhone and iPad are both produced in Japan.)

Already in a Week State

Japan’s economy was weak before the tsunami hit. The third largest economy in the world, Japan also has the most debt of any developed nation. Julian Jessop, Capital Economics’ Chief International Economist, insists that the timing of Japan’s tragedy “could not have been much worse.” So far, it is the most dramatic obstacle Japan has faced in terms of recovering from the global recession. The heavily indebted country is expected to shell out at least 370 billion to help rebuild its cities and towns along the coastline.

A majority of the electronic and manufacturing businesses in Japan were far enough inland so as not to be susceptible to the earthquake or tsunami. However, these technology businesses are struggling to assemble and ship exports. Companies lack straw for packaging, and access to ports due to damaged railways and roads. The main concern for Japan’s electronic industry is the quake’s impact on the international supply chain.

The tsunami did, however, cause the immediate standstill of many electronic companies. Sony closed 6 of its manufacturing factories. A major Panasonic plant in Sendai was completely destroyed by the tsunami. Production in companies like Toshiba, Canon, Nikon, and Sharp have delayed or ceased production because of power outages and extensive damage.

Power Outages Big Problem

Power outages are a major hindrance in productivity. The nuclear power plant’s slow meltdown in Fukushima has the world incredibly concerned, with thoughts of Chernobyl lingering in everyone’s mind. Economically, the plan has caused the loss of productivity due to power rationing and outages. Electronics like memory chips and LCD televisions are expected to become in shorter supply.

Good News

There is a positive side to the situation: studies show that major natural disasters hardly ever have any long-term affect on the country directly affected. Most factories are only closed temporarily, and in spite of the disaster, Japan’s internet infrastructure is strong- good news during a bleak time. In the meantime, major electronic companies are doing their part in helping Japan get back on its feet. Sony has donated 300 million Japanese yen to aid in recovery. Other companies are following suit. Though Japan has a long, painful recovery ahead, thankfully the economy won’t suffer as much as was immediately thought.

References: Rediff.com, Money.MSN.com, Ameriloansearch.com & ElectronicNews.com.au

Citations:
  • By Kure (UserKurefile) [CC-BY-SA-2.5 (www.creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons

About the Author

Cory H. is a web developer and IT professional in Phoenix, AZ. Cory writes for several websites and enjoys keeping up on the latest news in the technology industry.

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