Companies remain in limbo as new earthquake rattles Japan

The ongoing turmoil in earthquake-ravaged Japan continues to keep suburban manufacturers and other businesses in limbo, not knowing when a recovery will be securely under way or if they should jump to suppliers elsewhere.

While many of the larger corporations have alternative work sites worldwide, smaller companies are hunkering down, hoping for the best even after another strong quake struck Japan Thursday, said Andrew St. John, spokesman for the Japanese Chamber of Commerce & Industry of Chicago.

“A lot of companies are hanging in there and riding this out,” said St. John. “But some others may be looking at alternatives. They’re just hoping they’ll be able to rebuild there and stay there.”

On Thursday, Japan endured a 7.4 aftershock that struck the devastated northeastern part of the country. There were no immediate reports of deaths.

A 9.0 earthquake a month ago led to the deaths of thousands of people and evacuations of many more after serious radiation leaks from damaged nuclear power plants.

Hundreds of suburban and Midwest companies employ workers in Japan in various industries, including technology. They have reported business interruptions and even the closing of some facilities, said Ed Longanecker, executive director of TechAmerica, a trade association in Naperville.

“The impact of the ongoing turmoil will continue to have ripple effects for companies, particularly those dependent on Japanese components in their supply chain,” said Longanecker.

This will likely delay the production and distribution of components, including flash memory, storage, processors and hard drives, to name a few, that U.S. companies use in their final products, he said.

“This could, in turn, impact sales or delay the delivery of consumer electronics and other products that have been driving growth for U.S. companies,” Longanecker said.

How Japan and supporting countries respond to the ongoing crisis will determine the longer-term impact on economic development and area companies.

It’s unlikely that Thursday’s earthquake will have more impact than the large aftershocks that followed the main earthquake last month. Japanese economic output is still expected to decline this year, and the nation could suffer a mild recession in the short term, said Thomas Rowen of Bartlett, vice president and senior portfolio manager at Fifth Third Bank in Chicago.

The Japanese economy is expected to recover in 2012 as the process of infrastructure rebuilding steps up, said Rowen.

“Though Japan is a major trading partner of the United States and its economy represents a notable portion of global gross domestic product, we do not expect these events to seriously impact the United States or broad global economic growth,” said Rowen.

There has been some impact on the supply chain for Japanese products, including parts produced in Northern Japan for the automotive and consumer electronics industries.