Sunday, March 20, 2011

The Importance of Stabilizing Japan's Infrastructure

While Japan's hard-hit Sendai region is not a major manufacturer hub, the disruption of its power generating capacity is negatively affecting many of the country's industries including its high profile auto and semiconductor sectors. Japan is a leading supplier of materials used in lithium-ion batteries, polarized film used in liquid crystal displays, silicon wafers used in computer chips, along with many other technology-oriented components and materials. In the automotive industry, Volvo and Volkswagen AG are concerned about limited assess to automotive parts, while General Motors Co. plans to temporarily halt or limit production at its Shreveport Louisiana, Zaragoza, Spain and Eisenach, Germany facilities because of limited part supplies. Boeing Co. is concerned about access to airline parts and Sony Ericsson said production of smart phones might be impacted.

  • The human tragedy in the northeast region of Japan is catastrophic and the country's transportation, communication and electrical power infrastructures are under significant stress. 
  • While speculation continues on the negative impact to the country's economic centers, there is a significant lack of clarity. The stability of Japan's power grid will likely be a significant determinant in the speed of a Japanese recovery and the region's impact on its global trading partners. 
  • In the days ahead, we will learn more about the potential risks to the global supply chain.

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