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Toyota faces extended long-term damage as result of quake

by Jorge Hernandez on March 24, 2011

Toyota Motor may be facing a severe shortfall in long-term production due to the damage of the 9.0 earthquake that devastated Japan on March 11, an effect that could have repercussions in the United States, where some of the company's plants rely on parts imported from the country. Furthermore, there are still some electricity shortages. 

"This will be played out not in days, but in weeks," said John Hoffecker, head of the automotive practice at consulting firm AlixPartners LLP in Detroit, Bloomberg reports. "Nothing on this scale has really occurred before."

Speculation about the earthquake's economic repercussions had a notable effect on stocks, as Toyota has dropped 12 percent since March 10.

For other markets, the most noticeable impact will be felt from a sudden lack of certain key parts needed in the construction of automobiles, including chemicals, plastics and steel. The partial shutdown of the company will impact around 95,000 units of production – 60 percent of which is routinely shipped to other countries.

Toyota isn't the only company that has suffered damages that could prove to affect long-term outcomes. Sony's stock has also dropped by 12 percent and Panasonic has closed two factories in the area. Likewise, Fujitsu has closed 10 plants and Nikon has halted production at four.

"We are struggling intensely to resume our operations," said Takuya Moriguchi, a spokesman for Panasonic, Business Week reports.

Japan has estimated that the damages incurred by the earthquake may cost up to $308 billion. While the fears about the Fukushima nuclear plant have been somewhat allayed, Fox News reports that there are 8,649 people confirmed dead and 12,877 still missing since the disaster.

The number of fatalities may be a low count at the moment – the news source reports that police at just one of the affected prefectures have said that around 15,000 lives were claimed by the quake.  

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