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Tuesday, March 15, 2011

Disasters to rock economy

Cost of disaster too early to call but ¥10 trillion seen as starting point


Staff writer

While the enormous earthquake that struck eastern Japan is forcing many firms to suspend operations, two economists contacted by The Japan Times on Monday said it is difficult to predict just how dire the impact will be.

Major companies are shutting down their factories indefinitely, especially in quake-damaged areas.

Due to an inability to get parts, Toyota Motor Corp. said all of its domestic factories will be closed until Wednesday. Honda Motor Co. closed all factories until Sunday, except for a motorcycle unit in Kumamoto Prefecture that will shut down on Tuesday.

Sony Corp. has closed six factories in the Tohoku and Kanto regions for similar reasons.

The quake also caused havoc at the nation's top brewers. Kirin Holdings Co. said four beer tanks collapsed at its Sendai factory and that its quake-damaged Toride factory in Ibaraki Prefecture has closed. Sapporo Holdings Ltd. said land at its factory in Chiba Prefecture subsided due to liquefaction.

Tokyo Disneyland, meanwhile, remains closed for safety checks, said Oriental Land Co., which operates the theme park in Urayasu, Chiba Prefecture. The company said it might make a decision on whether to reopen next Monday. The park has been closed since Saturday.

Some economists have released reports saying the cost of all the damage will exceed ¥10 trillion.

Nomura Securities Co. and JP Morgan Securities Japan Co. released reports Sunday saying the impact of the wide-ranging disaster is likely to exceed the 1995 Great Hanshin Earthquake, which caused about ¥12.5 trillion in damage.

But Hideki Matsumura, a senior economist with Tokyo-based Japan Research Institute Ltd., said it is unclear how big the economic impact will be.

"Currently, infrastructure for economic activity — such as electricity generation, transportation and manufacturing — has been lost, and we don't know how long this situation will last," he said.

For instance, some automakers have closed factories in the Tohoku region and "the impact will be quite big if they cannot assemble cars without some parts manufactured in that region," he said.

Mitsuru Saito, chief economist at Tokai Tokyo Securities Co, said damage to oil refineries might disrupt the already tight gasoline supply. As a result, "commodity distribution might come to a standstill and goods would not be distributed to stores," he said.

Saito also said the overall impact remains uncertain because of the continuing aftershocks, the nuclear power plant crisis and subsequent disruption of electricity supplies.

Suspensions are rife. Toshiba Corp. suspended operations Monday at its plant in Fukaya, Saitama Prefecture, affecting the production of flat-screen televisions.

Mitsubishi Electric Corp.'s space satellite plant in Kamakura, Kanagawa Prefecture, was also shut for the day.

Renesas Electronics Corp. halted operations at seven factories in the Tohoku and Kanto regions.

Fujitsu Ltd., a maker of semiconductors and computer equipment, closed 10 plants in northern Japan as well as the greater Tokyo region, it said in a statement.

Among retailers, Isetan Mitsukoshi Holdings Ltd. closed its seven department stores in the region surrounding Tokyo, including Mitsukoshi Ltd.'s outlet in the city of Chiba.

Odakyu Department Store Co. and Sogo & Seibu Co. also followed suit, each closing three outlets.

Japan Airlines Corp., the nation's biggest carrier, said it would resume flights to some northern airports Tuesday, following cancellations after the earthquake.

Information from Kyodo and Bloomberg added



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