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The vulnerability of globalized supply chains

© Douglas Sprott CC BY-NC 2.0

Global

Following the 2011 earthquake and tsunami, automobile and electrical component production in Japan declined by 48% and 8%, respectively. But automobile production also fell by 20% in Thailand, 18% in the Philippines and 6% in Indonesia. Electrical component production fell by 18% in the Philippines and 8% in Malaysia. The Renesas Electronics Corporation, the world’s largest custom manufacturer of microchips for the automobile industry, and which serves Japanese automobile manufacturers, suffered estimated losses of US$615 million. Toyota lost US$1.2 billion in product revenue owing to parts shortages that caused 150,000 fewer Toyota automobiles to be manufactured in the United States of America; production stoppages at five plants in the United Kingdom; and reductions in production of 70%in India and 50% in China.

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