Sony, Canon Plants Knocked Out by Aftershock, Setting Back Japan Recovery

Sony Corp. (6758) and Canon Inc. (7751) were among manufacturers that shut plants in Japan following a 7.1- magnitude earthquake yesterday, delaying their recovery from last month’s record temblor.

Sony, Japan’s largest exporter of consumer electronics, said it suspended operations at two plants in Miyagi prefecture because of power outages caused by last night’s aftershock of the 9-magnitude temblor that struck March 11. Canon, Nikon Corp. (7731), Fujitsu Ltd. (6702), Tokyo Electron Ltd. (8035), NTT DoCoMo Inc. (9437) and KDDI Corp. (9433) also reported disruptions today.

The aftershock, the strongest to hit Japan since March 11, sets back the recovery as manufacturers from Sony to Honda Motor Co. reel from last month’s disaster that killed thousands, knocked out plants, triggered a nuclear crisis and caused electricity shortages. The damage from the initial disaster may total as much as 25 trillion yen ($293 billion), or 0.5 percent of Japan’s economy, the government has said.

“Everyone was hoping to restart production and get back on track, and this aftershock will bring fresh interruptions,” said Steven Zhang, a technology analyst at DBS Vickers Securities in Hong Kong. “This will have a negative impact on the supply chain.”

Power Plants

Two people died and more than 90 were injured by yesterday’s earthquake, the Fire and Disaster Management Agency said, as more than 3.6 million households lost power. The temblor struck at 11:32 p.m. near the site of the March 11 earthquake, Japan’s strongest on record, which left more than 27,000 people dead or missing.

Tohoku Electric Power Co., the main power supplier to the areas devastated last month, said five units at three of its thermal plants were shut after yesterday’s temblor.

The company restarted the 350-megawatt, oil-fired unit No. 2 at its Akita plant this morning, said Kazuya Sugawara, a spokesman for the utility. No radioactive water leaked from its Onagawa nuclear station after being spilled from spent fuel pools and a pumping room during yesterday’s earthquake, he said.

There have been about 900 aftershocks since last month’s disaster, which crippled Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear plant, causing radiation leaks and electricity shortages. Yesterday’s aftershock didn’t affect ongoing efforts to bring the plant under control, Tokyo Electric said.

Sony, Canon

The suspended Sony factories had resumed output March 28 after recovering from the earlier disaster, Mami Imada, a spokeswoman for the Tokyo-based company, said today by phone.

Sony rose 0.7 percent to 2,614 yen at the 3 p.m. close of trading in Tokyo. The shares have dropped 8.9 percent since March 10, the day before the initial earthquake.

Canon, the world’s largest camera maker, halted one plant in Aomori prefecture today because of a power outage after last night’s earthquake, said Gota Fumoto, a spokesman for the Tokyo- based company.

Nikon suspended production at two plants in Miyagi, the prefecture closest to the earthquake’s epicenter off the coast of northeastern Japan. The company is assessing damage at the plants, said Sayaka Suzuki, a spokeswoman for the Tokyo-based camera maker.

Tokyo Electron, DoCoMo

Tokyo Electron, the world’s second-largest maker of semiconductor equipment, halted operations at three plants in Miyagi and Iwate prefectures, said Yumi Ota, a Tokyo-based spokeswoman.

NTT DoCoMo, Japan’s largest mobile-phone operator, said 1,220 base stations on its network in northern Japan were offline after yesterday’s earthquake. The stations account for about 11 percent of DoCoMo’s network in the region, said Naoko Minobe, a company spokeswoman.

At rival KDDI, 489 base stations were affected, partially disrupting service in three prefectures, the Tokyo-based company, Japan’s second-largest mobile-phone operator, said in a statement.

Fujitsu suspended output at a chip plant in Iwate, said Takashi Koto, a Tokyo-based spokesman. The company is checking on a chip factory in Miyagi and another that makes products for computers and printers in Fukushima prefecture, he said.

Power Shortages

Tokyo Electric has said it expects a daily power shortage of 8,500 megawatts this summer as seasonal demand may peak at about 55,000 megawatts. The March 11 earthquake shut about 11 percent of Japan’s electricity-generating capacity, according to estimates by Goldman Sachs Group Inc.

Honda Chief Executive Officer Takanobu Ito said today he expects Japan’s government to set limits on electricity use. The Tokyo-based carmaker has lost production of about 58,000 vehicles since March 11 and may not return to full output for another two to three months, Ito said today at Honda’s damaged research-and-development center in Tochigi prefecture.

Toyota Motor Corp. (7203), the world’s largest carmaker, said today it planned to resume output at all its Japanese factories from April 18 to April 27, after halting most domestic output since March 14 because of parts shortages. Production plans for May haven’t been decided, said Paul Nolasco, a spokesman for the Toyota City, Japan-based company.

“Japanese corporations will have to think about how to diversify their production facilities,” said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $10 billion.

“They’ll need to see where to locate those production facilities offshore, which should be close to the end market.”

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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