Japan Press Weekly

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2011 July 27 - August 2 TOP3 [NUCLEAR CRISIS]

Shifting of plants abroad due to power shortages has no grounds

Japanese business leaders are threatening to move their companies’ production bases to other Asian countries unless power shortages are resolved in a move to contain a mounting call for withdrawal from nuclear power generation. However, Asian nations which Japan’s major corporations are considering as their new production sites are facing even more severe electricity shortages.

“Do you find it that easy to move your factories abroad? Securing the manpower and a stable electricity supply will be difficult over there, won’t it?” asked a reporter to Hasegawa Yasuchika, chairman of the Association of Corporate Executives (Keizai Doyukai) at a regular briefing held on July 20.

Hasegawa answered, “You have a point there” and admitted that production transfer to other countries “would not be so easy.”

Dai-ichi Life Research Institute on July 2 released a report on Asian economic indicators. The report points out that China’s energy shortfalls have already led to rolling blackouts in parts of the country which is resulting in a downward pressure on production.

The Japan External Trade Organization (JETRO) also foresees an unprecedented energy shortfall in the southern China regions, including Gunagdong Province, in 2011 and 2012.

A JETRO survey conducted last October with Japanese affiliated companies in Asia describes each country’s electricity situation as follows:

Indonesia, the Philippines, Sri Lanka, and Vietnam are facing a tight power supply and they are at risk for a jump in electricity charges in the short term. In fact, power-supply instability due to the limitation of electric transmission has already become evident in some areas within the Philippines and Indonesia.

According to the survey, many Japanese manufacturing companies which expanded their businesses to Asian countries are citing “power shortages and outages” as a problematic point in continued operations.

For example, the issue of “power shortages and outages” was raised as the main difficulty by 70.3% of Japanese manufacturers in Vietnam, 63.6% in Bangladesh, 56.8% in India, 46.8% in the Philippines, and 40.7% in Indonesia.

“Power shortages and outages” is listed as one of the top five problems along with a rise in procurement costs, difficulties in local procurement of raw materials and component, difficulties in quality control, and inadequacy in logistics infrastructure.