Small Businesses Likely to Feel the Heat of Japan’s Tsunami

Written on March 18, 2011 – 11:43 pm | by Ashley Johnson

Much of Japan’s industry is in a state of suspension following the devastating earthquake. Earthquake followed by tsunami and the subsequent nuclear calamity has stalled the economy. It has also left its mark on small businesses and it has become difficult for corporate Japan to think about business. The after-effects of the quake is also witnessed and felt on businesses of US and other countries.

The supply chain has been disrupted and this has left overseas customers and trading partners in a limbo. Businesses are not sure about the length of supply-chain disruptions and are left in a state of dilemma. Auto makers like Toyota Motor Corp. and Toshiba Corp. have slowed down production as they have to deal with supply chain interruptions, transportation problems and energy shortages.

There is hope that idled plants shall start production soon but there are questions raised about the lasting effect of the disaster on Japan’s economy. When Japan’s economy is hurt, it is very obvious that its affect will also spread to US and other neighboring countries like China and Philippines. Now Japan needs to borrow more money for recovery from damage and this will obviously affect the liquidity in the market. Japan too relies on nuclear power plants for 30% of its power supply. But the Nuclear tragedy has put the nuclear plants in a shut down mode. That means small businesses that rely on a continuous power supply will not be able to operate now. Many business organizations have already reported halt in production. Moreover, with the soaring of gasoline price, things have become tough for small business organizations.

There is anticipation that disruption from Japan’s automotive suppliers can possibly hurt brands from all over the world. The reason is the uniqueness of auto industry which has a large no. of small business suppliers as part of the global supply chain and that can affect other brands operating in other parts of the world.

Perfect Business!