Car Sales & Industry Feeling the Pain of Japanese Problems

Mar 18, 2011, 08:19

Car sales are already slumping and much of that is due to the inability to continue production overseas in the wake of the disaster in Japan. Today, we learned that workers at a General Motors plant in Louisiana are now feeling the effects of the earthquake that rocked Japan a week ago.

GM said it would suspend work at a southern truck plant because it was running short on parts made in Japan, which is battling the effects of a 9-magnitude quake and the tsunami that followed.

Much of the effort is centered on the damaged Fukushima nuclear power plant, which Japanese authorities raised to a level 5 emergency, on par with the rating given the Three Mile Island power plant's partial meltdown in 1979.

The New York Times reported Thursday many in Tokyo are leaving the area, shutting down businesses or moving operations to cities to the south. Tokyo is 140 miles south of the Fukushima plant that is sending up plumes of radioactive steam as military personnel, among others, try to cool exposed fuel rods with water sprayed by fire trucks and water canons.

The exodus from Tokyo in some cases leaves an open question as to who is left to run businesses in the city. The list of companies allowing employees to work from home or leave the area is extensive. It is now relatively easy to get a seat at some of the city's more popular restaurants, the Times said.

Executives, specifically, are leaving town, especially those who work for foreign firms.

GM's move could be the first of a spreading phenomenon of companies suspending work due to a lack of Japanese parts. A top official at Ford Motor Co. said the automaker from Dearborn, Mich., was reviewing its status day-to-day, which the equivalent of steering over the hood.

Major auto companies Toyota, Honda and Nissan had said they would reopen factories in Japan as early as two days ago, but that was when the news was dominated by the earthquake and tsunami, which leveled coastal villages and left tens of thousands dead. As the week progressed, the news grew increasingly ominous as it focused on the crippled power plant. Toyota now says it will be Tuesday at the earliest that its Japanese factories will start running again.

That leaves Japanese factories with executives fleeing to safer areas, while at the same time trying to assess if they have sufficient parts to reopen. The supply chain is one concern; shipping is another. Once built, it remains to be seen if a new Toyota vehicle can make it to port and across the Pacific.

Stocks on the Nikkei 225 index swung higher Friday on news the Group of Seven nations had charged their central banks with selling yen Friday to cool down the suddenly rising yen, which reached a record 76.25 yen against the dollar this week.

The yen responded quickly to the G7 declarion of "solidarity with the Japanese people." The dollar rose to 81.36 yen early Friday.

In international markets, the Nikkei 225 index in Japan added 2.72 percent while the Shanghai composite index in China rose 0.33 percent. The Hang Seng index in Hong Kong rose 0.07 percent while the Sensex in India fell 1.49 percent.

In Australia, the S&P;/ASX 200 index gained 1.56 percent.

In midday trading in Europe, the FTSE 100 index rose 0.49 percent while the DAX 30 in Germany added 0.48 percent. The CAC 40 in France gained 0.85 percent while the Stoxx Europe 600 rose 0.25 percent.

Source: UPI