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Businesses in numerous industries fear quake-related shortages

By Verne G. Kopytoff
New York Times / March 28, 2011

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SAN FRANCISCO — Tremors from the Japanese earthquake continue to rattle US businesses, even those that have experienced no disruptions in parts or supplies.

Businesses in a number of industries are trying to adapt. No longer can they count on reliable access to critical supplies, prompting frantic phone calls, contingency planning, and product redesigns.

For instance, film and television producers and the companies that support them are scrambling to stock up on commercial-grade videotape. A major supplier, Sony Corp., closed its factories in Japan. Many studios say they face no shortage now, but fear a shortage at some point.

“Folks everywhere know there will be a shortage and are buying as much as they can,’’ said Thomas Engdahl, chief executive of Advanced Digital Services, which archives Hollywood shows. “It’s creating panic buying.’’

Short of parts, automakers including General Motors have been forced to slow or stop production at some plants. Other manufacturers like Nokia, the Finnish cellphone maker, have said they expect disruptions.

But even companies that have maintained relatively normal operations have had to hustle.

A number of companies that make circuit boards are in upheaval. The earthquake forced a huge swath of Japan’s semiconductor industry to close, along with the factories that make a quarter of the world’s silicon wafers, the raw material used in semiconductors, according to IHS iSuppli, a market research firm.

Typically, manufacturers or distributors have stockpiled enough semiconductors and most other computer parts to feed production for several months. But to be safe, circuit board makers are redesigning their products so they can more easily switch components if there is a shortage, said Paul J. Reilly, executive vice president at Arrow Electronics in Melville, N.Y.

“While a replacement part may function similarly, it may not have the same shape,’’ Reilly said. “You may not be able to squeeze it on the same computer board.’’

Computer board makers may never put the redesigns into production, he said. But money spent coming up with new designs is minor, compared with the potential cost of stopping the assembly line. “Everyone is looking at their contingency plans,’’ he said.

Companies that use and sell commercial-grade videotape for television and movies are also sweating. Whether there is a shortage or simply a lot of hoarding is unclear. Filming has not been disrupted.

Sony produced several formats of videotape used by Hollywood, primarily from its Sendai plant, which was closed because of damage after the quake.

Supplies of one commonly used format, HDCAM-SR, are particularly vulnerable because Sony is the only manufacturer. Buyers quickly tried to scoop up as much as possible.

Fuji, Maxell, and other companies also make videotape. But if a crew switched formats, it might need to buy new equipment.