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18 Apr 2011

Vol.35 (En)

Please contact us at 9672-0104 or send email to (Mr. Terunuma)

Japan's Natural Disaster Impact:
Singapore's Manufacturing Slows Down,
Japan's Auto Sales Plunges.

Singapore Institute of Purchasing & Materials Management (SIPMM) announced on 5th April that despite the disruption caused by Japan's recent earthquake, Singapore's Manufacturing Sector managed to grow for the sixth consecutive month in March 2011, although at a slower pace. The Purchasing Manager's Index (PMI) of 50.1 was down by 2.2 points from Feb, attributed to the first-time drop in new orders and a lower level in new export orders.

The Key Electronics Sector posted a PMI of 51.3 points, down by 1.3 points compared to the previous month of Feb at 52.6 points, because of slower growth in new orders and lower levels in production output, imports, and input prices. However, the Economic Development Board (EDB) pointed that Singapore's long-term outlook on its electronics industry remains positive on strong global demand, despite short-term uncertainties caused by the Japan earthquake. EDB explained that the impact on Singapore has been limited to individual companies, which get supplies from the many factories in Japan that were knocked offline by power outage due to the devastating March 11 quake and tsunami, rather than the broader sector. Mr Yeoh Keat Chuan - Assistant Managing Director of EDB said “The Japan disaster plays on both sides; one is of course there may be some shift in terms of capacity requirements to Singapore, but secondly also in terms of supply chain". He further shared, “Based on our discussions with companies, they have shared with us that by and large, they have enough inventory to last at least the next one to two months. In the meantime they're exploring how to diversify their supply chain as well."

EDB reflected on Singapore's Electronic Manufacturing performance last year, which output grew to S$89.9 billion ($71.3 billion) - a 26.9 percent expansion that exceeds the global industry growth of 9.3 percent. Hence, the EDB expects the electronics industry, which contributed 7 per cent to the island city-state's 2010 gross domestic product, to remain robust on global demand of products such as tablet PCs, smart phones, electric vehicles and 3D television. Mr Yeoh elaborated, “An increasingly sophisticated and affluent middle-class population worldwide, but particularly in Asia, will drive that growth. In Singapore, we were therefore fortunate to have built up the capacity and capability over the past year to take advantage of this".

In Japan, car sales plunged nearly 40 per cent in the month of March following the tsunami and nuclear disaster. Japan Automobile Dealers Association informed that automakers sold 279,389 cars in Japan last month, down 37 per cent - the biggest ever year-on-year drop for March. The plunge in sales was due to weak consumer sentiment following the March 11 earthquake and tsunami, which decimated much of northern Japan, and the ensuing radiation leaks at the coastal Fukushima nuclear power plant. The association's spokesman Masashi Miyajima explained, 'People are simply reluctant to buy cars at this time. The tsunami and the ongoing nuclear disaster have depressed consumer sentiment'. Mr Miyajima cited that many people in the quake-hit areas were also canceling car purchases. In addition, the tsunami caused massive disruptions in the supply of auto parts, forcing many auto-assembly plants in Japan - including Honda, Toyota Motor Corp, and Nissan Motor Co to suspend production.

Japan's two Honda auto-assembly plants are scheduled to reopen on 11 April after a month-long shutdown.