Japanese manufacturers, battered by the March 11 mega-earthquake and tsunami, say a prolonged shortage of material supplies will likely affect the production of many consumer goods.
Japanese manufacturers, battered by the March 11 mega-earthquake and tsunami, say a prolonged shortage of material supplies will likely affect the production of many consumer goods.
The damage to facilities and equipment caused by the Great East Japan Earthquake is more extensive than many companies had feared, resulting in a dire shortage of crucial materials.
As a result, industries across a wide sector are trying to come up with stopgap measures to prevent shortages. This could entail shifting production of materials in quake-hit areas to unaffected regions like western Japan.
Japanese automakers, along with companies that make materials for the construction industry, were shocked to discover that the domestic production capacity for zinc has plunged to around 30 percent of pre-quake levels. Zinc is essential for the galvanization of steel sheets used for automobiles and roofs to prevent rusting.
With the prospect of unsteady supplies of zinc, the top three makers have been forced to halt production.
The plant of an affiliate of Mitsui Mining & Smelting Co. in Hachinohe, Aomori Prefecture, was badly damaged by tsunami. Mitsui Mining & Smelting, the nation's largest zinc maker, controls some 40 percent of the domestic market. At the affiliate, Hachinohe Smelting Co., part of the production facilities remain submerged in nearly 1 meter of seawater.
An official at the company said it will take more than a month to resume operations at the plant.
Akita Zinc Co. in Akita, a zinc smelting unit of Dowa Holdings Co., the second-largest maker, has stopped production because of frequent power outages following the quake.
Manufacturing high-quality zinc used to galvanize steel sheets for automobiles and other products requires an uninterrupted power supply. A power outage lasting several hours can seriously undermine product quality.
The company has been holding talks with Tohoku Electric Power Co. about a stable electricity supply restored in hopes of restarting its operations by the end of April.
Toho Zinc Co., the No. 3 player, has shut its zinc smelting plants in Annaka, Gunma Prefecture, and in Iwaki, Fukushima Prefecture.
It will take a long time for the company to restart its Onahama plant in Iwaki, which is located some 60 kilometers south of the stricken Fukushima No. 1 nuclear power plant.
"The employees at the plant have been evacuated and equipment repair workers are unwilling to visit the facility," said a Toho Zinc official, echoing fears of radiation exposure.
The prices of zinc imports are beginning to creep up.
To avoid running out of stocks, zinc makers are now ramping up production in western Japan and seeking to secure emergency zinc imports. An official of the Japan Mining Industry Association, however, said that it is unclear how much these measures will compensate for the decline in production in quake-stricken areas.
A possible copper shortage is also looming.
Operations at two major copper refineries have been halted since they were hit by tsunami. The two plants--Onahama Smelting and Refining Co. in Iwaki, a subsidiary of Mitsubishi Materials Corp., and the Hitachi copper refinery in Ibaraki Prefecture operated by Pan Pacific Copper Co., a unit of JX Nippon Mining & Metals Corp.--produced some 400,000 tons of refined copper in 2010, or 40 percent of overall domestic demand.
JX is working feverishly to reopen the Hitachi refinery by the end of April. But the Mitsubishi Materials' Onahama plant cannot ensure a steady supply of industrial water.
"We cannot tell when the facility will come back online," said a Mitsubishi Materials spokesman.
Copper is used widely in the production of electric wires, circuit boards and air-conditioners.
"It is impossible to forecast the extent of the effects (of the copper shortage) on finished products," said an industry source.
Steelmakers are also racing to repair their damaged facilities and equipment.
Sumitomo Metal Industries Ltd. has begun a trial run of two blast furnaces at its plant in Kashima, Ibaraki Prefecture. Until the plant becomes ready for full-scale operations, Sumitomo Metal will have to buy materials from its planned merger partner, Nippon Steel Corp. It will then have to process them into products used by the construction industry.
On Saturday, Yoshio Haga, president of Nippon Paper Group Inc., a leading paper manufacturer, visited the city hall of Ishinomaki, Miyagi Prefecture, and met with Mayor Hiroshi Kameyama.
Haga said the damage to the company's Ishinomaki mill and surrounding areas was "really beyond description."
Haga went on to say that the company "will rebuild at any cost."
Among paper manufacturers, Nippon Paper Group was hit the hardest by the calamity because many of its facilities are located in the Tohoku region. Six of the company's factories, including the Ishinomaki mill, are still idle.
As a result, the company has withdrawn its original forecast of dividend payouts of 40 yen per share for the year through March.
As to whether the company can pay dividends, a representative said that decision is up in the air because the impact of the disaster on the company's earnings is still hard to estimate.
Many paper manufacturers are planning to expand production at facilities that were not affected by the quake and tsunami.
Even so, there is a prospect of a paper shortage, especially among publications and magazines with large circulations.
However, production of toilet and tissue paper is unlikely to be affected as few of the manufacturing facilities were affected.
The current shortages of these products at stores in the Tokyo metropolitan area will disappear once consumers stop hoarding.
Printing ink may also fall into short supply.
Maruzen Petrochemical Co., a maker of special solvents used to produce ink and paint, sustained significant damage to its plant in Ichihara, Chiba Prefecture.
Mitsubishi Chemical Corp.'s manufacturing complex in Kamisu, Ibaraki Prefecture, which produces ethylene, a basic material for chemical products, has also come to a halt.
"It will take more than two months to restart operations there," said a Mitsubishi Chemical representative.
Ink makers are scrambling to contact trading companies to secure imports of these materials.
(This article was written by Atsushi Komori, Takashi Fukuyama and Daisuke Fukuma.)