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Supply concerns grow as Japan output hit

iPad - Concern growth about supply chain
iPad - Concern growth about supply chain

From Apple's new iPad to Chevrolet pick-ups and many of the world's airplane kitchens, concern is spreading down the global manufacturing supply chain about the impact from Japan's earthquake last week.

Plant shutdowns across Japan following the earthquake, tsunami and nuclear crisis threaten supplies of everything from semiconductors to car parts to manufacturers across the globe.

Even where factories in Japan are operating, power outages, shortages of fuel and raw materials and ruptured logistics mean products and parts face delays in getting to customers.

Honda Motor company said today that it had extended a production halt in Japan, where it makes more than a fifth of its cars, for a further three days until next Wednesday. And, citing a memo distributed by the car maker, the Wall Street Journal reported Honda had warned US dealers it was not sure if it could resume full production at some of its Japanese plants before May.

Japan's grip on the global electronics supply chain is causing particular concern. The world's third-biggest economy exported 7.2 trillion yen ($91.3 billion) worth of electronic parts last year.

Analysts said that if the Japan crisis is prolonged, they expect a shortage of electronic parts in the second quarter. Japan provides 57% of the world's wafers, used to make the chips that go into mobiles phones, cameras and other electronic devices.

Apple may face shortages of key parts for its newly-released iPad 2. Several parts of the new version of the popular iPad tablet PC come from Japan, including the battery and the flash memory used to store music and video on the device.

Toshiba, one of the companies that produces the NAND flash memory used in the iPad 2, had briefly shut a flash memory facility in Japan, and warned it could face problems getting raw materials. Apple launched the iPad 2 in the US last week to strong demand, with many stores selling out and analysts estimating sales of 1 million units during the debut weekend.

Goldman Sachs has warned of potential bottlenecks in the supply of silicon wafers, conductive film used in LCD circuits and resin used to connect chips to boards - products made by Japanese companies such as Shin Etsu and divisions of Sony, Hitachi and Mitsubishi.

Japan's top car manufacturers including, Toyota and Nissan, are struggling to restart production amid a shortage of parts, labour and power following the 9.0 magnitude earthquake and tsunami.

The largest US car maker, General Motors, said it would temporarily idle a pick-up truck plant in Louisiana, where it builds the Chevrolet Colorado and GMC Canyon models, due to a parts shortage stemming from the crisis in Japan.

'Like all global automakers, we will continue to follow the events in Japan closely to determine the business impact,' GM said in a statement.

Renault Samsung, the South Korean unit of French car maker Renault SA , said it will cut back on weekend and overtime production because of a potential parts shortage, and GM's South Korean unit said it was considering a similar move.

A Japanese company that makes galleys for the long-awaited Boeing 787 Dreamliner, said it could face delivery delays due to scarce petrol supplies.

Jamco, which ships the galleys from Yokohama port after making them at a plant in Murakami, Nigata, in northwest Japan, said production was unaffected, but delivery could be hampered by petrol supplies and higher prices.

Nissan to monitor vehicles for radioactivity

Nissan said today that it would monitor all its vehicles made in Japan for radioactivity, amid international concern over efforts to avert a nuclear catastrophe at a stricken atomic plant.

'We will continue to implement all appropriate measures to reassure the public that all products from our company remain within globally accepted safety standards,' the company said in a statement.

The testing will continue 'until we are confident that any risk of contamination is completely removed,' the car maker said.

Attempts are being made by Japan's Self-Defence Forces to douse fuel rods and prevent a calamitous radiation release at the Fukushima number one power station.

Levels of radiation there have fluctuated wildly after the plant 250 kilometres northeast of Tokyo suffered critical damage from Japan's biggest ever earthquake last week and the devastating tsunami it unleashed.

The government has set a 20km exclusion zone and told those living between it and 30km from the plant to stay indoors as hourly radiation levels in the some nearby areas spike.

The twin disasters knocked out the cooling systems, sparking a series of explosions and fires. Authorities have since raced to keep the fuel rods inside reactors and containment pools submerged under water. If they are exposed to air, they could degrade further and emit even more dangerous radioactive material.