Japanese firms rush to resume production as earthquake disrupts local economy

Sumitomo Electric Industries

05/01/2024 09:21

By Kantaro  Komiya
       TOKYO, Jan 5 (Reuters) - Japanese manufacturers rushed
to resume production four days after a magnitude 7.6 earthquake
killed at least 94 and disrupted infrastructures in the
country's west coast, as businesses were returning from gloomy
New Year holidays.
    About 80% of 200 companies with plants in the quake-hit
areas, including makers of machines, semiconductors and
textiles, have resumed production or would resume soon following
the quake, Industry Minister Ken Saito said on Friday.
    But the government cannot picture a clear timeline for the
recovery of the region's power supply, Saito added. Roughly
24,000 buildings in Ishikawa, the hardest-hit prefecture where
the quake's epicentre is located, are still out of electricity,
according to Hokuriku Electric Power  9505.T .
    Electronic parts supplier Murata Manufacturing  6981.T  on
Friday said it was examining the damage at five plants in
Ishikawa and neighbouring Toyama, while eight other plants in
the region have resumed production or would do so by Tuesday.
    Carmaker Toyota Motor  7203.T  was looking into how its
production might be affected after its suppliers Aisin  7259.T 
and Sumitomo Electric Industries  5802.T  suffered some damage
from the earthquake, president Koji Sato said.
    Display makers Japan Display  6740.T  and EIZO  6737.T , as
well as chipmakers Kokusai Electric  6525.T , Sanken Electric
 6707.T  and Toshiba Electronic Devices & Storage, have said
they were checking and repairing damaged factory facilities.
    The economic loss from the earthquake could amount to less
than 0.01% of Japan's gross domestic product, Nomura Securities'
Chief Economist Kyohei Morita estimated on Thursday. The impact
on wider supply chains would be milder than that from the 2016
Kumamoto earthquakes which hit auto and semiconductor industrial
hubs, Morita wrote in a note to clients.
    Unlike the 2011 East Japan earthquake and tsunami, which
triggered nuclear plant meltdowns in Fukushima and led to a
nationwide power crunch, the quake's impact on electricity
supply remained regional, although it could affect Japan's push
to bring its nuclear capacity back online.
    While manufacturers are the pillar of the local economies of
the quake-hit Ishikawa and Toyama, accounting for a third of
corporate revenues, services companies, such as builders and
hotels, provide the most jobs there, according to market
research firm Teikoku Databank. 
    The quake and a fire it set off have knocked Ishikawa's
major tourist centre Wajima, known for fisheries, lacquerware,
and markets, just as tourism was making a comeback from the
COVID-19 crisis.
    "The damages to infrastructure and reputation of Ishikawa's
tourism sector could linger for a long time - possibly more than
a decade", said Teikoku Databank analyst Daisuke Iijima.

($1 = 145.2500 yen)

 (Reporting by Kantaro Komiya; Additional reporting by Ritsuko
Shimizu and Maki Shiraki; Editing by Tomasz Janowski)
 ((Kantaro.Komiya@thomsonreuters.com; Twitter: @kantarokomiya;))