Cunningham Lindsey on the ground in Japan - Update

29 Mar 11

While the clean-up continues, the enormous job of rebuilding and getting Japanese manufacturing production back on track starts. Companies with damaged production plants, especially those in the global electronic and car production areas, seem to have been most affected and this loss of production and supply shortages will have ongoing ripple effects, not only to the Japanese economy but also to the wider global one.

Power cuts and outages, lack of parts and electronic components, closure of ports and damage to infrastructure will continue to hamper Japanese manufacturers' efforts to get back up to speed. There have been recent newspaper reports about large Japanese car manufacturers and electronics companies struggling with ongoing shutdowns at production plants which all results in a significant decrease in output. Some companies are looking at temporarily shifting production overseas.

According to english.news.cn "The global supply chain disruption following the earthquake and tsunami in Japan has sent shockwaves through auto makers in China, especially companies that are funded by Japanese car makers.... Some local brands could also face production disruptions because they receive key components from Japan to boost quality, according to the China Passenger Car Association. Some carmakers would run out of stocks at the end of this month, the association said. If they did not adjust the operation pace, the production of some models could be halted under extreme circumstances, it said."

But where does this leave companies who utilise Japanese parts and electronic components in their products? In short, this could produce a claim for Contingent Business Interruption (CBI) as the supply chain is disrupted which impacts on a company's ability to continue to produce goods for sale. Japan makes 40 per cent of global electronic components, 19 per cent of semiconductors, and 20 per cent of all technology products.

"The effect worldwide is already being felt. For example, in Louisiana a General Motors truck plant announced last week that it was shutting down due to a lack of made-in-Japan component parts. For many manufacturers made-in-Japan parts shortage situations are sure to come. Significant numbers of factories in Japan are struggling to resume production in the face of in extreme cases heavily damaged or destroyed factories and in many cases diminished electricity supplies and disruptions caused by damaged transportation networks."

Stuart Devine, Regional Director for South-East Asia, and some of our CAT Team members have been deployed and are now on the ground in Tokyo. They have already commenced dealing with losses and are supporting both Nagamatsu Inc. and our international clients.

Please don't hesitate to contact us if we can be of any assistance.

Ben Price (London)
Mobile: +44 7831 217 510
bprice@cl-int.com
Damon Bennett (Australia)
Mobile: +61 411 485 513
damon.bennett@cl-au.com
   

 

 


 

Cunningham Lindsey maintains a comprehensive network throughout Asia with offices in Hong Kong, India, Indonesia, Korea, Malaysia, Singapore, Taiwan, Thailand and Vietnam and associates in Guam, Japan, Pakistan and Sri Lanka.

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