Japanese crisis could fuel supplier disruptions in the aviation industry

on Tuesday, April 12, 2011

Japanese crisis could fuel supplier disruptions in the aviation industry  The 9.0-magnitude and subsequent tsunami that struck Japan on March 11 is having far-reaching consequences beyond even the most pessimistic forecasts. The Japanese economy is now projected to suffer even more from the destruction caused by the natural disasters, and now U.S. aircraft production could suffer as a result, according to a recently published report.

U.S. aircraft makers assert the ongoing Japanese crisis hasn't affected production yet, but in the coming weeks there could be supply chain disruptions resulting from factory shutdowns in the island nation. "We just don't know," said Teal Group analyst Richard Aboulafia, when asked if the industry would suffer supplier issues that are currently plaguing the technology and automobile industries. "Historically, Japanese industry bounces back pretty fast. The problem is, of course, it's a global supply chain, and you're only as strong as your weakest link."

The increasing interconnectedness of the global economy has largely driven down costs, but it is also hurting businesses now as Japanese manufacturers struggle to bring production back to full capacity, according to aviation analyst Loren Thompson."Of course there's going to be an impact because the United States has gradually offshored many industrial parts that were once produced domestically," affirmed Thompson.

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