BANGKOK (Nikkei)--The severe flooding in Thailand is now also starting to take a toll on global production of automobiles and electronic devices like hard-disk drives.
Water began to inundate the large Navanakorn industrial park in the northern suburbs of Bangkok on Monday. More than 400 Japanese corporations have plants at this Pathum Thani Province site or the five Ayutthaya Province industrial parks that have already been flooded.
Initially, factories churning out parts for vehicles and electronics were closed, causing Thai assembly plants not directly hit to cut or suspend production. But now, the impact on production is beginning to spill over to locations beyond Thailand.
Honda Motor Co. (7267) has decreased output in Malaysia, having already suspended Thai auto production until Friday. The firm ships parts from Thailand to factories in neighboring countries. It has not disclosed the scope of the production cut in Malaysia, where it has the capacity to build 40,000 units a year.
About half of the 1.64 million vehicles produced by automakers in Thailand last year were exported. Toyota Motor Corp. (7203) may be forced to halt exports to such markets as Australia and Indonesia.
Roughly 60% of the world's hard drives are made in Thailand, so the floods will likely impact production of personal computers, recording devices and other equipment toward year-end. NEC Corp. (6701) uses Thai-made drives from several manufacturers in Japanese-assembled PCs. Although it has enough inventory for now, it has asked several hard-drive manufacturers to boost output at locations outside Thailand. And an official at a major Taiwanese PC manufacturer says the supply of hard drives may be disrupted from mid-November to mid-December.
Factories of several makers of hard-drive components have been inundated, including Nidec Corp. (6594), Minebea Co. (6479) and TDK Corp. (6762). Toshiba Corp. (6502) has closed down a drive plant, and Hitachi Ltd. (6501) cut production at two unflooded factories Monday because of a parts shortage.
Sony Corp. (6758) has largely halted Thai production of mirrorless digital SLR (single-lens reflex) cameras and is considering making them in China, Japan and elsewhere. The company may postpone the launch of a mirrorless product from the currently planned Nov. 11.
(The Nikkei Oct. 18 morning edition)
BANGKOK (Nikkei)--With a quick recovery from flooding in Thailand looking increasingly unlikely, Japanese companies here have begun to search for substitute sites to manufacture their products.
Tohoku Pioneer Corp. shut its factory for automotive audio equipment parts at Rojana Industrial Park after the facility was inundated. Even after the water is pumped out, the restoration of essential utilities is expected to take some time. The Pioneer Corp. (6773) unit will try find other ways to manufacture the products, according to a company official.
Nitto Denko Corp. (6988), which makes industrial tape at the same industrial park, has begun considering production at domestic and overseas plants. Nissan Motor Co. (7201) said that 20 parts suppliers with factories in Ayutthaya Province were hit by the flood. With its parts inventory to dry up on Thursday, the automaker is trying to figure out a way to continue production using alternative parts from Friday.
Mitsubishi Motors Corp. (7211) will suspend operations at its vehicle assembly plant in Chonburi Province from Thursday evening to Saturday due to a parts shortage. It has yet to decide what to do on Monday and beyond.
Honda Motor Co. (7267) is rushing to gather information after its automobile plant was flooded. It shut down its motorcycle factory in Bangkok on Tuesday to prepare for flooding, and the facility will remain closed due to a parts shortage.
Toyota Motor Corp. (7203) plans to stop vehicle assembly through Saturday. It has asked a domestic manufacturer to produce some of the parts, including aluminum wheels, that it made in Thailand until the flooding.
Nikon Corp. (7731) is scrambling to gather information on a SLR (single-lens reflex) camera plant that was flooded, but details are murky because personnel cannot get close to the facility. It is believed to have about a month's worth of stockpiles of digital SLR cameras. If production equipment is underwater, the factory will be unable to resume operations quickly even after the water is pumped out, spoiling the firm's plan to fatten up inventories ahead of the year-end shopping season.
(The Nikkei Oct. 13 morning edition)
TOKYO (Nikkei)--Major Japanese travel agencies have been forced to cancel tours of Thailand by the severe flooding in that country.
JTB Corp. will discontinue tour packages departing through Friday for stays in Ayutthaya Province, one of the hardest-hit areas. H.I.S. Co. (9603) and Nippon Travel Agency Co. have decided to cancel all tour packages that involve sightseeing in that province through departures on Oct. 24.
Hankyu Travel International Co. and ANA Sales Co. have revised tours so that participants can enjoy sightseeing in Bangkok and elsewhere instead of going to Ayutthaya. Customers will be able to cancel reservations without paying fees for departures through Oct. 31 with Hankyu Travel and through Oct. 25 with ANA Sales.
Sightseeing in Bangkok has not been significantly impacted so far, according to the travel agencies. But Kinki Nippon Tourist Co. (9726) has canceled tour packages to the capital until Friday. If the flooded area widens, the firms may have to cancel or revise trips to Bangkok, the main destination for Thai-bound tourists.
(The Nikkei Oct. 18 morning edition)
TOKYO (Nikkei)--Overseas travel demand has been recovering rapidly due to the strong yen and waning consumer self-restraint that followed the March 11 disaster, but cheap, nearby and short trips are still popular, says Akira Hirabayashi, president of travel agency H.I.S. Co. (9603). The travel executive recently spoke with The Nikkei about industry trends and what he thinks lies ahead for the Japanese economy.
Excerpts from the interview follow.
Q: What has overseas travel demand been like since the disaster?
A: Our company's overseas travel revenue rose 3.6% on the year in March. That's because many Chinese and South Korean students studying in Japan returned home.
Our overseas travel revenue edged up 1.2% on the year in April but fell in May and June, probably because of the mood of self-restraint that prevailed among consumers after the disaster. However, our overseas travel sales picked up again in July and surged 15.8% in August to hit a record high. The overall industry showed a similar trend. According to the Japan National Tourism Organization, the number of people who traveled abroad in August matched the record set in August 2001.
Q: What has caused overseas travel demand to recover?
A: Waning consumer self-restraint and the strong yen. Many companies allowed their employees to take longer vacations, with more flexible scheduling, as part of power-saving efforts.
The decline in the number of foreign visitors to Japan has also helped improve overseas travel demand. Foreign visitor numbers have fallen about 30% in recent months. That has made it easier for Japanese to reserve seats on out-bound flights.
Q: Have there been any shifts in overseas travel demand?
A: In July and August, the summer holiday season, Hawaii and Guam were the most popular destinations. Seoul is also popular. Consumers still prefer cheap, nearby and short trips to distant and expensive trips to the U.S. and Europe.
The average unit price is 120,000 yen, about the same as a year earlier, but tourists are spending more money overseas, according to one survey. Tourists feel the benefits of the strong yen more strongly overseas.
Q: How long will the number of foreign visitors to Japan continue to decline?
A: According to our overseas branches and tour bookings, foreign visitor numbers are on a recovery track. Foreign visitor numbers are expected to pick up around the Chinese New Year in late January next year. Flights from Japan next February and March may have fewer seats available.
Overseas travel demand plunged after the 9/11 terrorist attacks in 2001 and the SARS epidemic in 2003, but it recovered six months later both times. Japan is still the No. 1 destination for many Asians. But the crisis at the Fukushima Daiichi nuclear plant needs to be kept under control.
Q: What is your outlook for the Japanese economy?
A: The percentage of Japanese who traveled abroad peaked in around 2000 and stood at just 13% last year, compared with 20% in South Korea and 35% in Taiwan. Overseas travel demand surged in Japan in the 1980s, a trend now being seen in other parts of Asia.
Many Japanese companies need to expand into Asia, but I'm afraid the low percentage of Japanese who travel abroad might be an obstacle to their business activity in Asia. The domestic travel market is saturated. Japanese companies have much more know-how than their foreign rivals, but it is difficult to secure workers who can introduce that expertise overseas.
Q: Why is that?
A: Fewer young Japanese are traveling abroad. Young people earn more in Japan than in other Asian countries. I think it's a matter of their interest or motivation when it comes to visiting foreign countries.
-- Interviewed by Nikkei staff writer Tadanori Yoshida
(The Nikkei Oct. 17 morning edition)
TOKYO (Kyodo)--The ruling Democratic Party of Japan on Friday held the first plenary meeting of its project team tasked with considering whether Japan should join negotiations for the U.S.-backed Trans-Pacific Partnership free trade framework, with participating lawmakers engaging in heated discussions.
Yoshio Hachiro speaks at the first meeting of DPJ's project team on TPP.
At the outset of the meeting, Yoshio Hachiro, the head of the project team and a former trade minister, said, "I would be delighted if we can reach a certain consensus on the TPP through aggressive discussions here."
Prime Minister Yoshihiko Noda has said Japan will decide on whether to join the trans-Pacific free trade negotiations at an early date, as the nine countries involved in the talks aim to reach agreement on a broad outline of the deal at the Asia-Pacific Economic Cooperation forum summit in Honolulu in mid-November.
But members of both the Cabinet and the ruling party remain at odds over the issue.
At the meeting of the project team, some participants, including Masahiko Yamada, a former farm minister who does not want Japan to join the TPP talks, complained that the team's board consists mainly of lawmakers supportive of participation.
Opponents of the TPP also called for the team's meetings to be fully open to the press in order to ensure discussions are transparent to the public. Friday's meeting was only partially opened to the press.
During the first half of the meeting when reporters were allowed to observe, Yamada, who heads a political group calling for "cautious" consideration of the TPP, said, "There are too many problems in the TPP with regard to sectors such as services, medical care and drugs."
"I will never understand why we have to rush so much (to decide on the matter)," Yamada said. There is strong opposition among Japanese farmers who fear an influx of cheap agricultural imports if Japan joins the free trade pact involving major farm exporters such as the United States and Australia. In principle, the TPP would eliminate all tariffs on imports.
The Japan Medical Association has also voiced concern over the country's participation in the TPP talks, with an executive member saying the deal could lead to the entry of foreign medical services into Japan and encourage a profit-oriented economy in the domestic medical sector.
Meanwhile, TPP advocates say if Japan fails to decide on joining the negotiations soon, it could lose an important opportunity to take part in the rule-making process for the free trade framework.
Hachiro said, "From a broad perspective, I think Japan would benefit greatly from taking a leadership role in the rule-making process in the Asia-Pacific region."
The DPJ's TPP project team is scheduled to hold its second and third meetings on Monday.
(The Nikkei October 14, 2011 edition)
TOKYO (Nikkei)-While many of Japan's leading exporters are expected to ratchet down their earnings forecasts for the current fiscal year, some firms are chalking up strong sales and profit growth by carving out niches in a generally sluggish domestic market.
Hiramatsu, which operates luxury French restaurants, is among the companies that doing well despite difficult business conditions.
A multitude of factors is threatening to wipe out the profits of export-focused companies such as auto and electronics manufacturers. Among them are a looming recession in Europe, a yen stuck at historically high levels against other major currencies and massive damage to manufacturing operations in Thailand from the flooding there.
With investors worried about the bottom lines of Japanese exporters, The Nikkei Veritas examined the track records of listed companies whose overseas sales made up less than 10% of the total for the five years through fiscal 2011 to determine which are best insulated from overseas risks.
The survey found 20 firms that have managed to more than double their operating profit during the period, despite the global financial crisis triggered by the collapse of Lehman Brothers.
Comfortable niches
One such company is SHO-BI Corp. (7819), which designs and sells a wide range of women's accessories, from pool floats to handbags to false eyelashes. SHO-BI posted increases in sales and profit for nine straight years through September 2010 and is forecasting a record profit for the just-ended fiscal year.
The company launches some 5,000 new products annually, which are designed and developed exclusively by women. Female employees also oversee its manufacturing.
SHO-BI prospers by focusing on niche products that larger companies overlook. One good example is its Diamond Lash line of false eyelashes, which have been a big hit with over 6 million sets sold so far.
Daiken Medical Co. (7775), a manufacturer of medical equipment, is another firm hoping to notch up a record profit for the current fiscal year through March 2012.
The company's main products are containers that absorb blood and other bodily fluids from patients during surgery. Daiken's containers are popular with doctors because they solidify bodily fluids, allowing for easy disposal. Daiken Medical controls 60% of the domestic market for such containers. Another company that does well at home is Plant Co. (7646). Based in Sakai, Fukui Prefecture, it runs a chain of large stores that sell food, clothing and household goods at discount prices. Plant is a pioneer in this type of retailing in Japan. It has raised its earnings steadily despite the fact that most of its stores are in sparsely populated areas. Its efficient inventory management and cost control is credited for the company's strong performance.
Other companies, including Twinbird Corp. (6897), Koshidaka Holdings Co. (2157) and Escrit Inc. (2196), thrive by identifying and meeting consumer needs that others have missed.
Hiramatsu Inc. (2764), which runs high-end French restaurants, also made it on to The Nikkei Veritas list of stellar performers, demonstrating that success in a challenging business environment is not just a matter of price-cutting.
The success stories show that it is still possible to make money in Japan's shrinking consumer market.
(The Nikkei Veritas Oct. 16 edition)
TOKYO (Nikkei)--Construction companies are rethinking the way they design houses in the wake of the March 11 disaster, as homebuyers are increasingly prioritizing safety over appearance and layout.
Workers repair the roof of a home damaged by the March 11 quake. Builders are responding to heightened consumer consciousness about home safety by packing their houses with new features.
In a tsunami-ravaged town in Miyagi Prefecture, one house has drawn attention for remaining standing while those around it were swept away. The company that built the house, Sumitomo Forestry Co. (1911), closely examined the structure to get a better idea of why it proved so resilient.
The firm concluded that its construction method of joining the foundation and support pillars with bolts extremely firmly was the reason. Sumitomo Forestry uses more bolts than required by law -- which it does for better earthquake resistance -- and that, the company believes, is why the house was not washed away.
"We will further increase the structural integrity of our houses by improving our technology," said a company official.
When large homebuilders announced their fiscal 2010 business results after the disaster, executives at each commented that none of their houses had collapsed due to shaking from the quake. But that is not to say that their houses were completely undamaged. Many homes suffered exterior or interior damage, and many people were injured by falling shelves and other objects.
Perhaps needless to say, people -- especially those who experienced the worst of the quake -- are paying more attention to the basic structure of a house.
Quake-buster
Sekisui House Ltd. (1928) is inviting customers to a facility showcasing its proprietary anti-quake system, which uses rubber to dampen quake-induced shaking. Dubbed Sheqas, the system is built inside the walls and is said to halve the amount of deformation a house experiences in a quake. The company installed the system in 73% of the homes it built in August, compared with 31% in February.
Structural integrity is not the only safety aspect builders are looking at. Nobuo Takenaka, president of Misawa Homes Co. (1722), says "redundancy" has emerged as an important factor after the earthquake. He is referring to extra space in a home that can be used to store food or serve as a shelter in an emergency.
Storage space
Even before March 11, Misawa Homes was offering a line of houses featuring what it calls the "Kura" design, in which a storage space is built between the first and second floors. Previously, it pitched the Kura feature as a kind of "bonus" space not included in the total floor area. Now the company advertizes it as a space that can hold a week's worth of food and water.
"We also plan to redesign the Kura space as an indestructible disaster shelter," said President Takenaka.
Homebuilders are also looking to provide safety functions that go beyond design and extend to such intangibles as offering swift repair work after a disaster and supplying food and water.
"We will quickly review our system for storing materials used for repair work," said Toshiro Takeda, executive officer of Sekisui Chemical Co. (4204).
Stocking up
After the March temblor, the company was flooded by requests for repairs from customers. However, the firm could not deal with these requests quickly due to a shortage of plywood and other materials, caused in part by supply disruptions resulting from inaccessible roads.
Sekisui Chemical plans to end its practice of using just one supplier for a given product and begin procuring materials from several suppliers. It will also boost inventory levels for materials.
One problem homebuilders face in their push to make houses safer is that it also pushes up costs. Analysts say this presents them with the tricky question of how much of these costs to pass on to buyers.
-- Translated from an article by Nikkei staff writers Shogo Nakatani and Mai Nemoto
(The Nikkei Oct. 13 morning edition)
TOKYO (Nikkei)--General constructors are bringing new technology to market aimed at keeping houses from sinking when a powerful earthquake strikes.
The March 11 disaster caused the ground in some areas to liquify, spurring demand for stronger reinforcement of ground in residential areas.
Takenaka has technology that shores up the ground by injecting cement and sinking lattice walls underground.
Takenaka Corp. is using tricks developed from large urban developments for residential land reclamation as it aims to tap the homebuilding market.
The firm has technology that shores up the ground by injecting cement and sinking lattice walls underground to give the soil greater seismic stability. The techniques traditionally require large equipment, but Takenaka has improved the technology so that smaller machines can do the job in residential developments.
Toda Corp. (1860), Maeda Corp. (1824), Hazama Corp. (1719) and Waseda University have jointly developed technology that prevents liquefaction 20% more cheaply than conventional methods. The technology uses surfactant foam that reduces the sludge created when concrete is injected into the ground to reinforce it. This cuts disposal costs and thus keeps total construction costs down.
Homebuilder Sumitomo Forestry Co. (1911) has developed special steel piles together with Nippon Steel Corp. (5401). The piles have a sharper end and are sunk below ground. Although they are only two-thirds the length of a conventional pile, they offer the same degree of quake-resistance. Sumitomo Forestry is touting the performance of the piles, which it says are 30% cheaper than competing products. It hopes to outfit 150 houses a year with the piles.
(The Nikkei Oct. 17 evening edition)
OSAKA (Nikkei)--Mitsubishi Chemical Holdings Corp. (4188) and Toray Industries Inc. (3402) are among Japanese manufacturers of advanced materials looking for new applications for their products to maintain leads in the global market.
Advanced materials improve the performance of a broad range of products, including smartphones, green automobiles and water treatment plants. Japanese companies are said to control global market shares of 50-70% in such fields as carbon fibers, water treatment membranes, OEL (organic electroluminescent) materials and metallic glass. Such technologies have allowed them to remain competitive against South Korean and Chinese rivals, but the Japanese firms need to find new applications for their materials and tap new markets in order to maintain an edge.
Mitsubishi Plastics Inc. dominates about 80% of the global market for strong carbon fiber used in industrial machinery. Mitsubishi Rayon Co. makes lightweight carbon fiber for aircraft, golf club shafts and other applications. Plans call for combining the technologies of these two Mitsubishi Chemical units to develop light and durable materials for wind turbine blades within two to three years.
Toray is seeking new applications for its carbon fibers, including eco-friendly cars.
Wind power generation is expected to explode as such nations as China and India turn to renewable energy sources to address power shortages. Demand for carbon fiber is forecast to grow as blades become bigger to improve power generation efficiency. Mitsubishi Plastics plans to spend about 5 billion yen to boost the annual output capacity of its Kagawa Prefecture plant 50% by fiscal 2015 from 1,000 tons now.
Toray intends to use its membranes designed for desalination plants to treat sewer and to remove radioactive substances. The company believes that its membranes can cut the concentration of radioactive substances by a factor of 300 to as much as 1,500. It plans to offer the materials to central and local governments as a way to decontaminate soil and debris at low cost.
Nitto Denko Corp. (6988), which vies with Toray for the lead in the global water treatment membrane market, aims to apply such technologies in a new energy field. It has partnered with a Norwegian utility to develop technologies for generating electricity by tapping the difference in salt content between seawater and fresh water.
Asahi Glass Co. (5201), which makes a special glass that protects the surfaces of smartphones, is considering using the glass for solar cells. Nippon Electric Glass Co. (5214) has begun developing glass for use in the electrodes of lithium ion batteries.
(The Nikkei Oct. 13 morning edition)
TOKYO (Nikkei)--Supermarkets are hoping to lower the cost of installing solar power systems by purchasing the necessary equipment as a group.
The government will introduce a feed-in-tariff program next year, which is expected to boost demand for renewable energy.
Environment Consulting Organization Corp., which provides about 3,000 supermarkets nationwide with power consumption meters, will in November set up a cooperative for supermarkets to buy solar power equipment in bulk.
The cooperative will allow one-stop service for supermarkets, ranging from design and implementation to maintenance. The co-op will buy panels and other equipment from both Japan and overseas.
The group purchasing system is expected to reduce installation costs to around 350,000 yen per kilowatt, roughly 20% cheaper than conventional methods.
Many supermarkets have yet to solar power systems. If all were to do so, they could generate about 2.5 million kilowatts of electricity, equivalent to the power output of two nuclear power stations.
The environmental consulting firm is funded by Panasonic Electric Works Co., Tokio Marine Capital Co. and other companies.
(The Nikkei Oct. 18 evening edition)
TOKYO (Nikkei)--Businesses that promise to deliver peace of mind to nervous consumers are gaining traction, with home water delivery services doing particularly well by tapping demand among parents worried about radiation in drinking water.
Nac delivers the goods.
As the Fukushima nuclear plant disaster escalated in the aftermath of the March 11 earthquake, mothers with small children were terrified by news that excess levels of radioactivity were detected at a water-processing facility in Tokyo. As stores quickly ran out of water, they turned to companies that deliver water bottles to homes and offices.
Nac Co. (9788), one of the nation's largest water delivery firms, had signed up roughly 100,000 new customers through Aug. 31. In just four months, the company acquired roughly a third of the 300,000 customers that it had over the previous eight years it had been operating.
Osaka-based Daimaru Enawin Co. (9818) built a new factory in Yamanashi Prefecture to expand its business in Tokyo. It has signed up 2,500 customers since the disaster, double the year-earlier figure. Daiohs Corp. (4653), which mainly serves corporations, fielded inquiries from employees at client companies about receiving deliveries at home. Home delivery customers and sales are both up about 40% from a year earlier, according to President Shinichi Okubo.
The water delivery market is estimated at 90 billion yen, according to an industry group. Although smaller than the roughly 200 billion yen mineral market, the business has grown considerably.
Until now, Nac spent heavily on sales promotions to boost its name recognition at the expense of its profit margin, which is only about 1.9% for the water delivery operations. But the segment enjoys a high gross profit margin of around 60% due to the low cost of water. Once a company secures customers, the business becomes lucrative as sales promotion expenses decline. The operating profit margin could reach 10-15%, according to an executive at the firm.
Other sectors also see a business opportunity in providing assurances to worried consumers. Saint-Care Holding Corp. (2374) offers private nursing care insurance to allay concerns that benefits under the public insurance system will not be sufficient. By paying premiums of 1,000 yen to several thousand yen a month, policyholders receive coverage for services that public insurance does not cover, such as in-hospital care and cooking services.
Individuals are not the only ones spending money to protect against an uncertain future. Mitsui-Soko Co.'s (9302) earthquake-proof warehouses with enhanced security are increasingly popular among corporations. The buildings are not connected to outside networks, so there is no fear of hackers stealing information. Mitsui-Soko has received many inquiries from financial institutions and direct-marketing companies, and a warehouse in Osaka Prefecture that opened in February 2010 is full, according to the company.
(The Nikkei Veritas Oct. 16 edition)
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th