Tsunami forced manufacturers to rethink globalized production


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It's good that Japanese manufacturers are learning from this disaster. Japanese manufacturing remains extremely strong, despite what the naysayers and uninformed like to say.

0 ( +1 / -1 )

It's good they learn, but I do believe that in the long run it is going to force corporations to look to other less vulnerable locations beyond Japan for suppliers.

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It's good they learn, but I do believe that in the long run it is going to force corporations to look to other less vulnerable locations beyond Japan for suppliers.

But if Japan has 'virtual monopolies' as the article states, then there are no other suppliers. Japan's manufacturing industry is responding to the disaster through companies spacing out their industry to prevent the same shortages occuring again. Yes, the earthquake had a huge effect on both Japan and the world's perception on it, but it definitely does not signal any death throes for its manufacturing, which is unfortunate news for those who gleefly lap up the 'Japan's industry is dead!' narrative.

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Not only the car industry, but even companies that produce and sell parts of other electronic devices.

One example is the solid state capacitors in motherboards. More motherboard producing companies around the world boast of using 100% Japan-made solid state capacitors, or even Elpida, making memory chips.

Personally, I thought that most of the computer parts I have bought and used over the years were made from other countries. But because of the economic standing of Japan and the world in general, we are now learning these facts.

2 ( +2 / -0 )

Japan will come back with a roar.

-1 ( +1 / -2 )

This is probably nothing new, but Japan, in competition with cheap parts made in China and abroad has kept many vital technology and manufacturing within Japan. That, combined with the efficient manufacturing of the Toyota Production System, was proven to be very fragile against times of crisis.

I always thought lean production meant risk for the procurement side. Like the article says, companies really need to look into all parties down the line. There may be many options, but I don't think everything will go abroad as Sony along with many other companies learned another sour lesson in Thailand last year.

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If I get it right the tsunami caused big companies such as Toyota to broaden their connenction with other firms (to have better control on their suplyers and what they supply). Which suggests that the tsunami (and other natural disasters as well) not only shows to what extent the world is connected through the problems that emerged all around the world (such as shortages of supplies even for companies outside of Japan, and the global suffering at large) but actually forces us to connect more between eachother which, with the right aim, is something positive. Remember now that Kanji of the year last year in Japan was "kizuna" which means "bonds" or "ties" between people. If the aim of the connection can come to aim for other things than economic growth as in this case, there will be a reason to really talk about positive effects of the tragedy.

10 ( +11 / -1 )

See what business can do when it has thousands of workers to do it for them?

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Staffan, broadening connections and knowing everything down the line doesn't necessarily mean that they are strengthening the ties between companies. Especially huge companies, since at the end they really don't care so much about their many small vendors. If they can get another company to supply them with the same part that one vendor supplies, they could simply cut the 100 % they need to maximum 50% each depending on how well they behave (cost cut and all), then they would say they have managed the risk efficiently.

It's different with parts that are really unique, like with Renesas. I hear the automobile industry went in carrying their weight (along with many good intentions to help out and many help and supplies too, I should add), to get their products up and running first.

It is sad to say, but business is business.

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What do they want? Make the whole world manufacturing supplier & stock?

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Small businesses like these manufacturers are the foundation for industry and innovation. Yet, these companies depend on the big boys for their livelihood. Now that the word "diversify" is in the mix it I see the corporations having a much stronger negotiation stance - the devil always does. We now want your part for this price or we take all our business overseas. That's business. Sadly, the 3/11 disaster was convenient for a lot of companies that were looking to phase out their domestic operations.

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TSRnow: You're right business is business. Only one purpose with that, pretty one sided. Wealth above all seems to be the rule in the world today. This disaster will not change this rule, neither for Toyota or anyone else. But blows like this one together with financial crisis and other calamites increasing constantly in the world will certainly have some kind of effect other than making life just a little bit harder for the big money makers. Kizuna, connection, may seem like just another slogan or even a sign of weakness, but there's surely more to it than that. Problems make people look for a solution, the tsunami no exception. Who knows where to look? Well, I don't know, but it seems to me that one thing that has become evident after the disaster is the degree to what the whole world is connected. It's not just that it has made Toyota reflect upon how they are connected to their 2nd, 3rd or 4th tier suppliers, but it seems to work on multiple levels. The feeling of connectedness between people after the the quake (that gave rise to the Kizuna as the word of the year) is not something concrete, but it's certainly evident.

8 ( +8 / -0 )

The manufacturing system in Japan is unique. There are tens of thousands of small engineering workshops making one, two or three parts, and supply a major company. Even in the back streets of Tokyo, you can find these places. In Tohoku, many of those were lost to the earthquake and tsunami.

Yes, 99% of all Japanese companies are SMEs (small-to-medium-sized firms) which together employ over 70% of the working population. The Economist did a great article which outlined Japan's continued dominance of manufacturing in its capital goods production and its graduating onto advanced manufacturing.

''Whereas big Japanese electronics companies such as Panasonic, Sharp and Sony have been losing market share to rivals from China, South Korea and Taiwan, these smaller, less well known Japanese firms continue to dominate niches upon which the global technology industry depends. The Japanese even have a term for them: chuken kigyo (strong, medium-sized firms). It doesn’t matter if the brand on the casing says Apple, Nokia or Samsung: the innards are stuffed with Japanese wares. According to an official at Apple, the company depends on Japanese firms for vital components because few suppliers elsewhere can live up to its rigorous standards.

“They may not be the sexiest products, but you can’t make a semiconductor chip or an LCD panel without them,” says Alberto Moel, an expert on high-tech manufacturing with Monitor Group, a consulting firm, in Tokyo. Japanese companies serve more than 70% of the worldwide market in at least 30 technology sectors worth more than $1 billion apiece, according to the Ministry of Economy, Trade and Industry (METI).They range from certain films to diffuse light used in LCD screens (where they have the whole of a market worth more than ¥270 billion, or $3 billion) to multilayer ceramic capacitors that regulate the current in electrical equipment (77% of ¥540 billion).''

2 ( +2 / -0 )

Staffan, Kizuna is a beautiful word that can explain the heartwarming bonds among the people. But we are talking about huge, sometimes heartless companies here that cannot afford to make mistakes by letting emotion get in the way of their decisions. In the example I mentioned, if 50% does not hold the business for the small vendor, will the procurement guys say, OK we'll buy 10% more for a total of 110%? Not really. I really need to believe that something came out of all these tragic events, but I can't find too many (Business-wise). The connection may be there, but no Jo (as in Nin-jo).

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TSRnow Agree with you, it's hard to find any positive effects of the disaster, business-wise definetely so. Despite that, let's just hyptothetically suggest that they exist. Such effects might be invisible to the eye so far, but I think it's likely, as these disasters and blows keep repeating themselves to a greater rate all the time, that there will be more tangible positve effects also, maybe even in business in the end.

To people hit by blows like this I guess the notion of business in itself decreases in significance comparing to before. When something bad happens a human tends to shift her focus from things that before seemed significant, to more basic needs like closeness to friends and family etc. What if peoples values would really change from money-loving to people-loving? This would certainly change business and finance, say from regarding only profit for oneself to also regarding others' profit (economic or not). I know, we're not there. Utopic? As an effect of accumulated blows, it might be were we are heading. I certainly hope so.

3 ( +3 / -0 )

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