Japanese firms hit by supply woes

The earthquake and tsunami that devastated Japan and triggered a nuclear crisis have negatively affected nearly 60 percent of Japanese companies, disrupting production and supply chains, a Reuters poll showed on Thursday. While manufacturers were hit especially hard, there are already some tentative signs of recovery, underscoring that the impact - at least for some firms - may not be long-term.
The special survey of 400 large firms was taken between March 25 and April 11 in tandem with the monthly Reuters Tankan, a poll of corporate sentiment. The special poll was taken just weeks after a March 11 earthquake and tsunami ravaged north-eastern Japan and triggered a nuclear safety crisis. While Japanese companies are likely to be squeezed by production disruptions in northern Japan, as well as power shortages and supply woes, they may not feel the same pain as after the collapse of Lehman Brothers, when lending markets froze. "The impact of this earthquake will not be on the same scale as the Lehman crisis," said Soichiro Monji, chief strategist at Daiwa SB Investments, a Japanese asset management firm.
"This earthquake has more of an impact on the supply side than the demand side," he said, adding that he did not expect a prolonged impact on consumer spending from the disasters. Tokyo estimates the material damage alone could top $300 billion, making it the costliest natural disaster in history, leaving nearly 28,000 dead or missing and hitting the world's third-largest economy.
Still, some firms reported signs of improvement. About one-quarter of respondents, which typically numbered around 210 firms for each of the six questions in the survey, said their production or ability to provide services had already been restored to prequake levels, while an additional 54 percent said they were currently at more than 80 percent of prequake levels. Nearly 70 percent of respondents said difficulty in acquiring materials or parts was the single biggest problem in righting their businesses, a sign that supply chains remained hampered.
Global companies from semiconductor makers to shipbuilders are moving to minimise supply disruptions caused by the disasters. The earthquake and tsunami destroyed infrastructure and knocked out factories supplying products from steel to high-tech components. Firms such as Toyota Motor Corp and Sony Corp have been forced to suspend production. Plant closures and production outages among Japanese technology firms are major threats to the global supply chain, analysts have said.