It is much too early to predict how soon Japan will recover from the 
terrible devastation of last week’s earthquakes and tsunami. Your students, though, are aware of the situation on the ground and the implications for global commerce and manufacturing, so this is a topic worth discussing in class.
Various newspapers have taken differing views on how the devastation will affect the global economy. Today’s Wall Street Journal (March 14, 2011) comes right out and asks the question: “Are global supply chains so taut that a disruption in the world’s No. 3 economy will be felt around the world?” Their answer: Japan’s factories play an out-size role in global production , ranging from a fifth of the world’s semiconductors to advanced machine tools. The result could be shortages of key components around the world. For eaxample, Reneses Electronics is the world’s largest maker of micro controllers for cars and other equipment. In suffering major damage, it places customers at risk. Its chips are key ingredients and its inventory is not stockpiled nor readily replaced, employing the JIT concept. And most auto makers use only 1-2 suppliers for parts.
Likewise, today’s New York Times writes: “Most high-tech goods these days are produced through carefully orchestrated procurement and manufacturing networks that combine parts from around the globe, often shipped on tight daily production schedules. Even temporary shortages can drive up prices sharply.”
Forty percent of chips for smartphones and tablet computers and most LCDs for appliances are also made in Japan. Further, Sony’s Blu-ray disc and magnetic tape factories were flooded. And with rolling blackouts twice a day to conserve power, most manufacturers are unable to operate expensive machinery that requires stable energy. Toyota, Nissan, and Honda are not even sure the logistics are available to get their cars to ports for shipping.
Discussion questions:
1. Discuss the importance of having manufacturing facilities around the world?
2. How are Japanese automakers impacted with respect to US sales?
It would be interesting to have each student do a personal inventory of items that might be affected by such a crisis. While many of them may not have products made in Japan, using the two articles cited, they could come up with a list of components that are in the technology they use every day.
There is also a great lesson in this situation for giving students an interesting perspective on unintended and unanticipated disruption. Not only may this cause problems for American products and services, it also illustrates the need for all people to build equity to withstand radical changes in the economic climate. With the fragility right now of the American economy, the tsunami could create an even bleaker job market in the coming years – just when our students will be looking for work.