Forty-two percent of the manufacturers that switched to foreign suppliers after the March 11 earthquake plan to continue purchasing parts and materials from abroad, according to an industry ministry survey.
Forty-two percent of the manufacturers that switched to foreign suppliers after the March 11 earthquake plan to continue purchasing parts and materials from abroad, according to an industry ministry survey.
The survey, conducted between June 14 and July 1, covered 123 companies, including 65 manufacturers. The results were reported at a meeting of chiefs of regional industry bureaus on Aug. 1.
Many manufacturers started transactions with new overseas parts and materials makers after the Great East Japan Earthquake disrupted domestic supply chains.
The survey showed that what began as an emergency measure will likely continue even after supply networks in Japan recover--leading to a shrinking domestic economy.
The strong yen is expected to make manufacturers dependent on foreign suppliers over the long term. The Japanese currency traded at around 80 yen to the dollar when the survey was conducted.
The survey showed manufacturing activities in the quake-hit region were recovering.
Ninety-three percent of production bases damaged by the earthquake have been restored. At 80 percent of those facilities, production reached or even exceeded pre-quake levels.
At facilities where production was still below levels before March 11, 76 percent said it would recover to pre-quake levels by the end of this year.
At the Aug. 1 meeting, participants were concerned that the stronger yen and constraints on electricity supply, coupled with fallout from the earthquake, would accelerate a hollowing out of industry.
A chemical maker in the Kanto region, which is subject to a government order to cut peak electricity use by 15 percent this summer, was approached by China.
The Chinese asked the company to set up a factory in China, promising a stable electricity supply through dedicated transmission lines, according to a participant.
Similar overtures have been made by Thailand and other countries.
The industry ministry plans to increase subsidies to keep companies from relocating overseas in the third fiscal 2011 supplementary budget and the fiscal 2012 budget.