Sony, Toyota disruptions may last weeks after quake

Toyota Motor Corp. and Sony Corp., two of Japan’s biggest manufacturers, are facing worst-case scenarios of long-term production shortfalls as scores of plants remain closed and workers are idled in the aftermath of the March 11 earthquake and tsunami.

“The current situation is still difficult,” Chisato Kitsukawa, a spokesman for Tokyo-based Sony, by phone Saturday. The company has shut eight plants in Miyagi, Ibaraki and Fukushima prefectures, and workers are inspecting equipment and facilities, he said. Toyota has said it will keep 21 auto and components plants closed until March 22.

Sony and Toyota’s efforts to resume production are complicated by the need for hundreds of different components to build TVs and cars from a variety of different suppliers that may have suffered plant damage in the earthquake and tsunami. Japan is also facing electricity shortages because a nuclear power plant was crippled by the temblor.

“This will be played out not in days, but in weeks,” said John Hoffecker, head of the automotive practice at consulting firm AlixPartners LLP in Detroit. “Nothing on this scale has really occurred before.”

The earthquake and tsunami killed more than 7,000 people and damaged or destroyed more than 100,000 buildings in the Tohoku region of northeastern Japan, according to the National Police Agency of Japan. Workers are also battling to prevent a nuclear meltdown at a plant north of Tokyo.

Sony and Toyota, based in Toyota City, Japan, have both fallen 12 percent in Tokyo trading since March 10, the last day of trading before the quake. The Topix Index has dropped 11 percent.

Keisuke Kirimoto, a Toyota spokesman, didn’t immediately reply to message left on his cellphone yesterday.

For Sony, the most significant damage is to its Tagajyo plant, in Miyagi prefecture, that produces coating materials for magnetic tapes, touch-panel mobile devices and Blu-ray discs. Short-term recovery is “very difficult due to flooding caused by the tsunami,” Sony has said.

The electronics company and its suppliers probably have at least two weeks of inventory on hand, which offsets disruptions, said Jordan Selburn, principal analyst for consumer electronics at IHS iSuppli Corp. The more likely challenges are a shortage of basic components and power supplies, he said.

“Some of the less glamorous parts that they need to build their own stuff may be lost to them,” he said. “That’s the nail keeping the horse, for want of a shoe, from joining the battle and that leads to losing the kingdom.”

Toyota’s shutdown affects about 95,000 units of production, of which 60 percent is for shipment to markets, including the U.S., Steve Curtis, a spokesman for the carmaker’s sales unit in Torrance, California, said March 17. U.S. inventory levels remain “normal,” he said then.

Shipments of parts including chemicals, plastics, steel and other metals, precision ball bearings and electronic components may be disrupted for weeks, Hoffecker said. General Motors Co., the largest U.S. automaker, will suspend car production at plants in Spain and Germany next week because of a lack of Japanese-made parts.

“An automobile has 5,000 parts,” said Maryann Keller, an analyst and principal of a self-titled consulting firm in Stamford, Connecticut. “It has to be produced with every single one of them.”

Panasonic Corp., the nation’s biggest maker of batteries, has closed two plants in the area hit by the quake. It didn’t have an estimate for when production would resume, Akira Kadota, a spokesman, said by phone.

Fujitsu Ltd., the maker of personal computers and home appliances, has closed 10 plants and it isn’t able to say when they will reopen, said Etsuro Yamada, a spokesman. Camera-maker Nikon Corp. is yet to decide when it will reopen four plants shut since the quake.

“We are struggling intensely to resume our operations,” said spokesman Takuya Moriguchi.

Sharp Corp. is operating its Tochigi audiovisual products plant and several others at reduced hours to conserve power, Miyuki Nakayama, spokeswoman for the company, said by phone. Inspections showed no significant damage at plants in the quake areas, she said. 

(Bloomberg)