MARCH 11 EARTHQUAKE WRECKS HAVOC ON JAPANESE AUTOMOTIVE INDUSTRY

KUALA LUMPUR (Bernama) - The mega earthquake that struck the Tohoku

region, Eastern Japan, followed by a massive tsunami on March 11 has wrecked
havoc on Japan's economy.

It devasted roads, ports, houses and other vital infrastructure and brought
production facilities of companies located in the affected areas to a grinding
halt.

Companies located outside the areas were also forced to cease production due
to power distruption as well as difficulties in sourcing raw materials, parts,
components and finished goods.

Tohoku region was home to many automotive parts and component materials
suppliers.

Japan Automobile Manufacturers Association (Jama) said new vehicle sales in
April plunged a whopping 47.3 per cent, from a year earlier, due to production
disruptions caused by parts shortage following the March 11 earthequake and
tsunami.

This is the second consecutive month of steep decline in vehicle sales,
after sales which fell 35.1 per cent in March, it said.

"Sales of Toyota cars recorded the worst drop, declining 68.7 per cent,
while Honda shrunk by 48 per cent and Nissan by 37.2 per cent."

The association said production was not expected to return to pre-earthquake
levels until late this year and would not be able to meet customers' demand for
on-time delivery.

It said, by mid April, all factories resumed operations, however, production
at assembly lines were only running at 50 to 70 per cent capacity.

At end-March, Toyota said they were facing difficulty in sourcing
approximately 500 automotive parts like engine control units, brake-related
parts and steel sheets but the situation improved a month later with only
30 parts unable to be sourced.

Tohoku region is the center of automotive precision dies and parts and a
number of manufacturers, hit by the earthquake and tsunami, encountered total
wipe-out of machines, stocks and even workers and factory buildings.

To make matters worse, in early May, Japanese Prime Minister Naoto Kan
requested the Chubu Electric Power Co to temporarily shut down the Hamaoka plant
in the Shizuoka Prefecture, which sits on the Pacific coast, in a region
seismologists had long warned was due for a large earthquake.

The nuclear complex sits on a fault line and is thought to be at great risk
of being hit by a major earthquake.

The plant operator, Chubu Electric Co, halted the plant operations on March
15, anticipating the closure for at least two years.

Industries fear that this could badly affect the automotive industy in the
Chubu region or Tokai region, where major assembly plants of manufacturers like
Toyota, Honda and Suzuki are concentrated.

Malaysian Trade Commissioner in Tokyo Yuslinawati Mohd Yusof said the
impact of the aftermath of the earthquake on Malaysia's trade with Japan could
be seen in various industries, especially in Japan's main industries,
particularly the automotive, iron and steel as well as electrical and
electronics industries.

Suguru Okubo, Deputy Director of Advertising Department, Daily Automotive
News, said Malaysian automotive parts and component suppliers should act quickly
and offer their services to Japan's automotive makers after the disaster in the
Tohoku region.

In making the call, he said Japanese automotive makers were now looking to
source automotive components and parts from all over the world.

"The possibility is certainly open to Malaysian suppliers," he said during a
lecture for representatives of 11 Malaysian automotive parts and components
makers who participated in the three-day Malaysian Automotive Industries
Exposition held concurrently with the Automotive Engineering Exposition
in Yokohama recently.

Okubo said Japanese automotive makers were seeking companies which had
developed attractive special features.

"They are aiming at future growth and will move to find strong partners and
expand their network around the world," said Okubo, who had in the past, visited
various Malaysian automotive and parts and components makers.

Against this backdrop, he advised Malaysian suppliers to approach Japanese
car makers and show them what they had to offer.

Tadashi Mizushima, representative director of PNB Asset Management (Japan)
Co Ltd, said many Japanese companies have begun to relocate their production
base to safer places outside Japan.

Tokyo-based Mizushima, said he would recommended Malaysia as an ideal
location to relocate but many Japanese companies, especially the smaller ones,
were not familiar with Malaysia's manufacturing capabilities.

As such, he said, Malaysian agencies, entrusted with the task of increasing
Malaysia's trade and investment with other countries, should hold many
exhibitons or trade seminars in Japan.

Yuslinawati, nevertheless, called on Malaysian suppliers keen on trading
with their Japanese counterparts to showcase that the quality of their products
are even better than those originating from the United States or Europe.

"The testimonials on their products must be well founded and backed by real
data," she said, adding that Malaysian producers would have difficulty competing
in terms of pricing.

Although Malaysian products were more competitively priced, they were,
nevertheless, more expensive than those produced in China or Taiwan, she said.

Besides, Malaysian suppliers would also have to be very patient and keep in
constant touch with their potential clients in Japan to show that they are
serious.

"Once they (buyers in Japan) decide to buy from us, they would become loyal
customers," she said.