Companies in Japan evacuated and closed plants on Friday as they scrambled in the aftermath of a powerful earthquake and tsunami that struck the northeastern part of the country.
As aftershocks continued Friday, many company executives were trying to assess possible damage and determine what the long-term effect on their operations might be.
“There are car and semiconductor factories in northern Japan, so there will be some economic impact due to damage to factories,” Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo, told Reuters.
Any disruptions in Japan’s exports will inevitably ripple through an economy that has stagnated over the last two decades. Japan’s gross domestic product fell 0.3 percent in the October-December quarter as the end of generous government incentives on environmentally friendly cars resulted in a temporary decline in spending. At an annualized rate, Japan’s economy shrank 1.1 percent in the fourth quarter from the previous quarter.
All Japanese ports were closed, shippers said Friday, though the shutdowns may be precautionary. The country’s major container seaports, most of them south of Tokyo, play a crucial role in Japan’s export-driven economy. Japanese exports — chiefly automobiles, machinery and manufactured goods — rose by almost a quarter in 2010, the first increase in three years, and a lengthy shutdown could create costly delays up and down the global supply chain. Reuters reported that several airports, including Tokyo’s Narita, were closed.
Numerous airlines diverted flights away from the affected area, and the airport in the city of Sendai was flooded by a tsunami that followed the quake, according to the Japanese television broadcaster NHK.
The Japanese central bank said on its Web site that it would “do its utmost,” including providing extra liquidity, to ensure financial market stability.
Over all though, the real bulk of industrial Japan appeared to have been spared, said an economist in Hong Kong, who had been in touch with his colleagues in Japan but asked not to be identified as he was not authorized by his bank to talk about Japan.
“Inevitably there will be microeconomic disruptions, as there were after Kobe and even Chuetsu,” Richard Jerram, chief Asia economist at Macquarie, wrote in a research note, referring to other powerful earthquakes that had hit Japan in recent years. “However, many firms reportedly diversified supply chains in the wake of Kobe, so the impact should be lower.”
Most automakers halted production at assembly plants in the affected areas.
One worker died and more than 30 were injured when walls and parts of a ceiling crumbled at a Honda Motor research facility in northeastern Tochigi prefecture, The Associated Press said, attributing the report to the company. Production at two Honda plants was halted, but resumed shortly afterward at one.
Nissan Motor halted production at five of its plants in northeastern Japan and in the Yokohama area near Tokyo, The A.P. reported. It said two workers were slightly injured at its Tochigi plant and its technical center in Kanagawa prefecture, near Tokyo.
Toyota, headquartered near the southern port of Nagoya, said in a statement that no injuries had been reported at its operations, though a total of four plants in the north and northeast — in Hokkaido, Tohoku and Miyagi — had been shutdown. Other plants, the statement said, were back in operation, but the company was still evaluating possible disruptions to its supply chain.
A representative for Sony, headquartered in Tokyo, said the company had shut down its six northern plants — which make Lithium-ion batteries and Blu-Ray parts — and evacuated its employees there. No injuries were reported. Numerous other companies said they were still assessing possible damage; many others could not be reached for comment.
The Associated Press reported that the Cosmo Oil refinery outside of Tokyo was burning out of control with 100-foot flames whipping into the sky. Several nuclear power stations were shut down, according to media reports.
Miyagi, the prefecture that is home to Sendai and the areas most affected by the quake, accounts for 1.7 percent of the Japanese population and the same proportion of gross domestic product, while the region of Tohoku as a whole is about 8 percent of G.D.P., Mr. Jerram estimated. Initial reports suggested that Tokyo, the financial center of the country, had not been badly damaged, he added.
The region hit by the tsunami is known for growing rice, and other rice-growing areas around the Pacific Rim may see coastal flooding at a time of already rising world food prices.
But Ben Savage, the managing director for rice at Jackson Son & Company in London, one of the world’s oldest rice brokerage houses, said that the tsunami was unlikely to have much of an effect on global rice prices because rice tends to be fairly tolerant of the temporary ingress of salt water into paddies.
A separate concern is that many areas immediately adjacent to the ocean are now used for aquaculture of shrimp and fish and may be damaged, Mr. Savage said.
“The biggest problems tend to be infrastructure, roads and rail,” said Janet Hunter, who teaches Japanese economics at the London School of Economics. “Almost everything is going to have to be replaced” that fell in the path of the tsunami.
Christopher Gerteis, an expert in contemporary Japan at the School of Oriental and Asian Studies in London, said the region largely depended on local fisheries for their food, and that the cost of reconstruction would include reclaiming the fishing fleet.
One of the few things that was immediately clear was that investors were deeply unsettled by the disaster, which took place just as the Japanese economy had begun to gather some steam.
However, many economists also caution that economic activity remained feeble, plagued by deflation, high government debt, and an aging population — factors that contributed to the decision by the ratings agency Standard and Poor’s to downgrade Japan’s credit rating earlier this year.
The Japanese stock market had very little time to react to the quake, which occurred shortly before the end of the trading day in Tokyo.
The Nikkei 225 index, which had already been lower before the quake, ended down 1.7 percent for the day. Bond futures surged amid the uncertainty, though the yen quickly rebounded after initially dipping against the dollar as news of the quake came out.
“The last major earthquake to hit Japan was the Great Hanshin Earthquake which hit Kobe on Jan. 17th 1995,” Geoffrey Yu, a currency analyst at UBS in London, wrote Friday. The quake caused more than $100 billion in damage, but dollar-to-yen index fell over 20 percent in the following three months.
“There is reason to believe this time the reaction would be similar,” Mr. Yu said.
He noted that the insurance companies, though clearly implicated by the quake, might receive government backing.
Mr. Yu wrote that when aggregate claims exceed 1 trillion yen, the government takes on a much larger share of the cost, while insurers pay only a fraction. The damages wrought from the quake and its aftermath, he said, were likely to surpass that.
He said that damages from the Kobe quake had been mitigated by low levels of coverage at the time, conditions that may well apply in the latest earthquake
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