Death Toll Rises from Japanese Earthquakes; Supply Chain Disruptions Examined

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The death toll from earthquakes that struck southern Japan rose to 42 and the economic impact began to reverberate Monday as companies surveyed damage and the potential effects on production from supply-chain disruptions.

The quakes that struck the island of Kyushu since Thursday evening included some of the nation’s most devastating earthquakes since March 2011. There are 201 people seriously injured, 838 have light injuries, and 110,816 have been evacuated to shelters, according to Kumamoto Prefecture’s disaster countermeasures office. There has been additional damage in neighboring prefectures including Oita.

The Topix index slumped 3 percent to 1,320.15 at the close in Tokyo, with all but one of its 33 industry groups falling, after rising last week by the most in two months. The Nikkei 225 Stock Average dropped 3.4 percent to 16,275.95.

Toyota Motor Corp. fell 4.8 percent, the most in two months. The company’s operating profit may be reduced by about 30 billion yen ($277 million) for the quarter ending in June because the earthquakes have disrupted parts supplies, Mitsubishi UFJ Morgan Stanley estimated in a report.

Halts in production that began late last week at Toyota’s Kyushu factories will extend to other assembly lines in stages throughout this week, Toyota said.

The yen strengthened to 108.23 per dollar as of 4:55 p.m. in Tokyo as a plunge in oil spurred a flight to haven assets. Investors also are speculating that Japan’s government and central bank will need to consider more stimulus for an economy that is already struggling.

25,000 Rescue Workers

Prime Minister Shinzo Abe increased the number of rescue workers to 25,000 in the earthquake-stricken south of the country. An initial earthquake came on Thursday night, followed by more shocks that caused intense shaking. A magnitude-7.3 quake occurred at 1:25 a.m. local time Saturday and was most powerfully felt close to Mount Aso, an active volcano and popular tourist site. Television footage showed houses flattened and landslides that had swallowed up roads and railway lines in the village of Minamiaso.

Dai-Ichi Life Insurance Co. tumbled 5.6 percent, the most since Feb. 12, while Tokio Marine Holdings Inc. lost 5.9 percent. Other stocks fell on earthquake concerns with TDK Corp., which provides battery parts, down 5 percent. Kyushu Electric, which runs Japan’s only operating nuclear plants, was down 8 percent — the Sendai reactors in neighboring Kagoshima remain in operation, and Environment Minister Tamayo Marukawa said over the weekend that the plant doesn’t need to be shut down at this point.

Taiheiyo Cement Corp. finished 2.7 percent higher on expectations that demand will rise with the rebuilding effort.

Other stocks affected included Japanese insurance companies, with MS&AD falling 7.3 percent and the Topix insurance index down 5.8 percent. H.I.S., which operates the Huis Ten Bosch theme park in Kyushu, fell 12 percent, and was the fifth biggest decliner on the Topix index.

Nomura said in a report that the focus for automakers is on whether disruption will occur in the supply of chips, saying that even if output is affected for several weeks it will quickly return to normal, minimizing the impact on this fiscal year’s earnings.

Abe, in parliament Monday, said “we will take all necessary measures,” in response to a question about the possibility of an extra budget to finance disaster relief measures.

Surveying Damage

Companies in the region halted operations as they looked into the extent of the damage and sought to confirm the safety of their employees. Takeshi Hagiwara, a spokesman for Sony Semiconductor Manufacturing, said Monday that its Kumamoto plant remained idle. He said it has been difficult to check damage to facilities because of the concern about further aftershocks. Sony has four plants in the area that produce image sensors, with the Kumamoto factory the primary facility.

Honda Motor Co. has suspended production at its motorcycle plant in Kumamoto through Monday. Nissan Motor Co. stopped output at its plant in Fukuoka after the latest quake as it assesses the impact on the facility and its supply chain.

Fujifilm Holdings Corp. halted production of electronic-display devices at its Kumamoto plant, according to spokesman Takahiro Taguchi. Nippon Steel & Sumitomo Metal Corp. has suspended some of its facilities in nearby Oita prefecture for safety checks.

Tens of thousands of homes in Kumamoto prefecture were still without power, according to the economy ministry.

Transportation to the region continued to be affected, with ANA and Japan Airlines canceling all Kumamoto-related flights Monday, and most local trains not running. ANA and JAL said they would resume flights Tuesday.

JAL made a flight to the closed Kumamoto Airport to deliver 7,000 blankets, according to a spokesman, and will deliver more supplies as requested.

Delivering Food

Relief workers were dispatched to the region from throughout Japan and have been delivering food and supplies at evacuation sites. Teruko Maejima, 80, said she ran out of her apartment and to a parking lot after the earthquake early Saturday, bringing only a blanket with her. She has been moving between shelters since then — she returned once to her sixth-floor apartment to find it was badly damaged.

“I’ve hardly slept. Today we’ve got water, rice balls and bananas here,” she said at a shelter set up at City Hall. “I feel so lucky and thankful that I’m here. I could take cover from the rain.”

Hiroyuki Umeda, a sushi shop manager, said he has been offering free food to area residents. He said his staff prepared 250 servings of rice balls and miso soup — and they were gone in 15 minutes.

“I’m hoping to offer help even if it’s trivial,” he said. “It’s the toughest thing that you can’t find food.”

Shuji Sakai, 32, returned Monday to the house where he spent his childhood to survey the damage. The two-story house tumbled down after the earthquakes. His parents, who still live there and evacuated after the initial quake, asked him to go back to retrieve family photos and mementos. It was a sad visit.

“I was almost crying looking at my old house,” he said, wearing black trousers covered with dust. “My parents would have died if they had not escaped after the first quake.”

–With assistance from Takashi Hirokawa, Shingo Kawamoto, Takashi Amano, Emi Urabe, James Mayger and Craig Trudell.

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