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Newsmaker

Newsmaker preview: Rebuilding Japan

By Reuters Staff
June 20, 2011

The historic earthquake and tsunami on March 11, and the nuclear debacle that followed, have exposed the unique risks of doing business in Japan. Among the hardest-hit by the calamities has been the automotive industry, with a supply chain whose depth and complexity surprised even the car makers themselves. With parts production hampered by power outages, damaged equipment and in some cases, exposure to elevated radiation levels, all 12 of Japan’s car and truck makers were forced to stop their assembly lines in the weeks after the quake. A full recovery for Japan’s car production may yet be many months off.

 

Despite accounting for a fifth of the world’s earthquakes of magnitude 6 or greater, Japan is home to hundreds of companies churning out cars, chips and precision electronics, defying an exodus of factories for white goods and other products in the past decades. But the unprecedented scale of disruption has fanned concerns that these disasters would, once and for all, prompt the hollowing out of Japanese manufacturing and threaten the country’s export- dependent economy.

Many auto executives have been united in their vow to try to keep Japan’s storied “monozukuri” culture alive. Nissan Motor CEO Carlos Ghosn is no exception.

Better known for his no-holds-barred approach to cost-cutting, Ghosn last month celebrated the full recovery of a badly damaged engine factory not far from the stricken nuclear power plant in Fukushima. Far from pulling out of the region, Nissan is pouring millions of dollars to make the facility more resistant to earthquakes in one of the most seismically active countries in the world.

That’s not to say the temptation to abandon Japan for lower wages, more favorable exchange rates and expanding car markets will let up. Ghosn – like his peers – will come under more pressure than ever to explain how his company will balance its Japanese roots with the attraction of greener pastures overseas.

- Chang-Ran Kim, Asia autos correspondent

Carlos Ghosn, CEO of Nissan Motor and Renault, will speak at the Thomson Reuters Newsmaker event in Tokyo on June 22. The 60-minute session will be moderated by Reuters Deputy Editor-in-Chief Paul Ingrassia.

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