Economists fear a hollowing-out of domestic industries as Japanese firms consider relocating more business and production bases to other countries.
Disruptions to domestic supply chains caused by the Great East Japan Earthquake have forced many companies to consider exiting the nation. Also weighing is the shortage of electricity, which may persist for a long time, as it remains unclear when nuclear reactors suspended for regular inspections will be able to resume operations.
The 2011 white paper of the Economy, Trade and Industry Ministry, released Friday, emphasizes the sense of urgency over the situation. The nation needs to take urgent measures to avoid an expanding exodus by securing jobs at home and increasing the potential for economic growth.
Renesas Electronics Corp.'s main plant in Hitachinaka, Ibaraki Prefecture, was forced to suspend operations for about three months after the March 11 disaster.
Renesas' suspension caused many automakers at home and abroad to halt production. The firm holds about a 40 percent share of the market for semiconductor chips, or microcontrollers, used in auto parts.
A Renesas executive said the company plans to outsource more of its production operations to foreign firms to "avoid such negative impacts from future natural disasters."
Currently, Renesas outsources about 8 percent of its production to manufacturers overseas, but plans to raise the rate to 25 percent by March 2013. The company is also considering whether it should accelerate that schedule.
Firms in other industries also want to avoid the risks that come from relying on single companies to supply core parts, and are considering making more use of parts suppliers overseas to ensure stable supply.
Mitsui Mining & Smelting Co., which controls about 90 percent of the global market for ultrathin copper foils used in smart phones, has made plans to open a new production plant in Malaysia.
The move was prompted by the forced closure of its main plant in Ageo, Saitama Prefecture, for about a month just after the disaster due to rolling power blackouts.
"We have no choice but to establish a back-up system overseas," a Mitsui official said.
Hoya Corp. will in December open a plant to make optical glass for digital camera lenses and other products in Shandong Province, China. The firm has been pressing ahead with diversification of its production bases since its plant in Akishima, Tokyo, was forced to stop operations due to the rolling power blackouts.
METI's White Paper on International Economy and Trade 2011 shows the results of a survey of 216 major domestic companies, in which 163 responded.
Sixty-nine percent of the companies said accelerating the transfer of supply chain operations, in part or in full, overseas was a possibility.
Eighteen percent said there was a "low possibility" of relocating such operations overseas.
An official of an electronics parts maker said, "Unless we take some action, such as establishing a second head office in China, we won't be able to cope with situations such as a Tokai or Tonankai earthquake occurring."
Many companies see the potential for the continuation of the current power shortage due to delays in the restart of the suspended reactors as a major concern.
The disruption of supply chains by the Great East Japan Earthquake also had a negative impact on overseas manufacturers, because Japanese firms were unable to produce parts and other intermediate goods for export.
For example, many Chinese and Taiwan companies that make personal computers rely on parts and intermediate goods imported from Japan.
Exports of intermediate goods accounted for 9.1 percent of the nation's GDP in 2008 on value basis, which was about double the figure from 1990.
Companies in other countries now see dependence on the supply of goods from Japanese firms as a liability, and this view has contributed to Japanese firms receiving invitations to move their production bases overseas.
(Jul. 12, 2011)
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