Trouble befalls Japanese manufacturing workers following earthquake in February and ongoing Covid worries
The manufacturing sector in Japan is experiencing significant fall in semiconductor/chips output and affecting the automobile and electrical machinery production since the Fukushima-ken Oki earthquake (7.1-7.3 magnitude) off the East coast of Japan adding to ongoing Covid worries.
The 3rd largest economy in manufacturing tech and automobile parts is facing a decline in production output this quarter as Japan struggles to recover from the ongoing pandemic and the Fukushima earthquake that hit the nation this February rendering close to a million homes, businesses, and power plants in the northern region offline. Factory outputs showed a decline of 2.1% during this time bringing down the production of electrical machinery, automobile production, and key technological and communication parts affecting production of cars, home appliances, and smartphones.
Market strategist at Sumitomo Mitsui Trust Bank, Akayo Sera said, “The semiconductor shortage and natural disasters pushed down output by quite a lot.” Adding to this, Sera mentioned, “It will be hard for production to rebound” and “If there is a recovery in production, the pace will likely be very gradual.”
Surveys done by the Ministry of Economy, Trade and Industry (METI) on manufacturers since February 2021 revealed a further drop in manufacturing output by 1.9% in March, although is expected to bounce back by 9.3% in April this year.
Renesas Electronics Corp, a chip-making giant in Naka, Japan dominating a third of the global market share for microcontroller units used in cars, has anticipated at least a month for production to return to its usual capacity at the quake-hit plant.
The government hopes to provide subsidies for layoffs due to factory closures to help the slowly reopening country and its employees who may face further crises due to the decline in factory output. However, this may not help with the quick bouncing back of the automobile chip production.