Crisis may jump-start Japan economy: Stringer

Sony Corp Chairman Howard Stringer said that Japanese recovery efforts after the March 11 earthquake and tsunami may jump-start the country’s lagging economy as the country uses savings to rebuild.

“They’ll have to spend the money on rebuilding and restructuring,” Stringer said from New York on CNN’s “Fareed Zakaria GPS” programme, according to a transcript of the interview. “So that might also generate some energy in the economy.”

Sony and Toyota Motor Corp are among the scores of Japanese companies forced to halt some operations after the earthquake and ensuing tsunami that hit Japan and claimed more than 8,000 lives. Japanese manufacturers are also facing power outages, disruptions in the supply chain and a strong yen that’s undermining the competitiveness of exports.

Shares of Sony and Toyota, based in Toyota City, Japan, have both fallen 12 percent since the end of trading March 10, the last day of trading before the earthquake. The Topix Index has dropped 11 per cent.

Sony, Japan’s largest exporter of consumer electronics, is planning to resume partial operations at a plant that makes rechargeable batteries in Tochigi prefecture, northern Japan, from March 22, Hiroshi Okubo, a Tokyo-based spokesman, said by phone today. The plant would be Sony’s third to resume operations since the 9.0-magnitude earthquake resulted in the electronics maker halting 10 factories.

No end in sight
The company may restart a DVD-manufacturing plant in Ibaraki prefecture within a week, Okubo said.

A factory that makes magnetic tapes and Blu-ray discs suffered the most damage among the company’s facilities, Okubo said. The plant, located in Tagajo City, Miyagi, where more than 6,000 people live in evacuation centres, isn’t receiving any power and is partially covered with rubble and mud, he said.

“The problem is, we just don’t know enough at the moment as to when this crisis will end,” said Stringer, who flew out to New York the day before the earthquake hit.

Like other Japanese businesses, Sony is experiencing blackouts, transportation slowdowns, shortages of materials and suppliers unable to make shipments, Stringer wrote in an op-ed column published in the Wall Street Journal March 18. The company is beginning to recover from the “profound psychic and physical shock to our bodies and our businesses,” he wrote.

Death toll
The earthquake and tsunami killed more than 8,000 people and damaged or destroyed more than 100,000 buildings in the Tohoku region of northeastern Japan, according to the National Police Agency of Japan. Still, Japan’s economy may avoid a contraction and grow about 1 percent this year as the nation rebuilds, according to estimates by analysts at UBS AG and Nomura Holdings Inc.

“There is so much money there,” Stringer told CNN. “They save more acutely, as you know, than anybody else in the world.”

Japan will return to nuclear power after the crisis precipitated by the earthquake, which damaged nuclear reactors, subsides, Stringer said.

“The walls will be higher and the electricity power will be reorganised,” Stringer said. “And then, eventually, we’ll have to go back to nuclear power because windmills aren’t going to do it.”