Volvo reported yesterday that it has only a ten-day supply of Japanese-built navigation and climate control systems left and is girding for a possible production halt. Last week General Motors announced it was closing its 923 employee Shreveport, La. plant where it assembles Chevrolet Colorado and GMC Canyon models because of a lack of Japanese made parts. In Marion, Arkansas, the Hino Motors Manufacturing Plant that makes rear axles for Toyota Tundra pickup trucks and other Toyota models struggled to stay open in the face of a rapidly declining supply of gears and other parts that are imported from Japan.
The situation is similar in a variety of other industries. Much of the equipment used to make semiconductors is made only or mainly in Japan with two thirds of the critical steppers coming from Nikon and Canon. About 90 percent of the BT resin used in production of cell phones and laptop computers and 60 percent of the world supply of the silicon wafers used to make computer chips comes from Japan. Companies like Apple and Hewlett Packard could find themselves in significant trouble if disturbances in Japan stretch out much longer. Products that no one ever thinks about like tiny microphones, high quality galvanized steel, high performance machine tools, advanced electronic displays, and the carbon fiber that is used to make golf clubs and the wings of the new Boeing 787 Dreamliner all come either only or mainly from Japan.
A disaster in the United States would have nowhere near the impact on the global supply chain that the present disaster in Japan is already having. The reason is very simple. With a few exceptions like Intel computer chips (even Boeing only makes about 30 percent of the Dreamliner in America), the United States doesn’t make much for global markets anymore.
The notion of America’s economic triumph over Japan in the 1990s has been exposed for the myth it has always been.
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