Tsunami’s ripples felt in business | TahoeDailyTribune.com

Tsunami’s ripples felt in business

GRASS VALLEY, Calif. – Ripples from the Japanese tsunami of March 11 are washing up in western Nevada County, where companies are waiting to see how the disruption of electronics manufacturing there will affect them.

So far, none of the local companies contacted by The Union expected any major problems, though they may see affects within a few weeks or out eight to nine months, depending on the product and industry, manufacturers said.

At Applied Science Inc. in Grass Valley, assembly worker Brian Jennings on Tuesday mounted a motor onto a metal flange that will go onto a larger assembly that will, in turn, become part of the busy company’s HemoFlow 400.

People who donate blood may have seen this device: It gently rocks a bag of blood so the blood doesn’t coagulate. Parts for the HemoFlow come from as close as Auburn and Oregon and as far as China. And inside the little round motor, made by a company in Crystal Lake, Ill., is a part that comes from Japan.

Even before the disaster, the company has had a practice of working with at least two sources for each part, said Director of Operations Hillary Odgers.

“So far, the news is good,” Odgers said.

As suppliers and buyers all along the supply chain sort out the cost and source of parts in the future, changes in the marketplace could start appearing, however.

At Benchmark Thermal in Grass Valley, workers create tiny custom heaters. The company gets most components from China or Indonesia, so isn’t yet seeing any direct effects from suppliers, said Senior Sales Account Manager Serena Oliveira.

But Benchmark customers could be affected.

“It’s a big web, and it affects a whole lot of people a lot of ways,” Oliveira said.

Benchmark heaters wind up in a variety of finished products, and do things such as keep the fog out of telescopes and the frost off security cameras. If manufacturers of the finished product are held up while they wait for Japanese components, they will hold off on new orders of heaters, Oliveira said.

And if customers at the end of the chain – those buying the telescopes and security cameras – are themselves in Japan, they may well put off new purchases, Oliveira said.

At Miranda Technologies, “it’s probably too soon to tell,” Human Resources Director Jon Heinrich said. The Grass Valley firm makes routing switchers for audio and video production.

“We’ve heard rumors that some of the electronic parts coming out of Japan, there could be a problem there, but we’re not seeing that yet,” said Marketing Communications Manager Janet Swift of Telestream. The Nevada City firm makes digital media workflow systems.

“Our partner over there is Panasonic, and they’re on the other side of the island, and they’re not affected by” the earthquake and tsunami, Swift added.

“It is much too early to determine impacts at this point,” echoed Dave Perillo, senior vice president for global operations at Grass Valley, the Nevada City-based video switching equipment manufacturer formerly known as Grass Valley Group.

Ensemble Design gets several parts from Japan for its video converters, audio embedders and switches, but suppliers are still putting together a list of components that could see shortages, said Marketing Czar Cindy Zuelsdorf.

“We’re still going to meet our delivery schedule. That’s our plan,” Zuelsdorf said.

A bigger problem is, “we have a lot of customers in Japan,” she added. Ensemble employees also have close personal relationships with their Japanese distributors, some of whom were directly affected by the twin disasters, Zuelsdorf said.

Global impact

Japan manufactures an estimated 16 percent to 30 percent of electronic components used in other products around the world, according to a recent report by Citigroup Global Markets cited by Venture Outsource, experts on electronics manufacturing. (To read the full article, visit http://www.ventureoutsource.com/contract-manufacturing/defining-disaster-japan-impact-japanese-global-electronics-industry-supply-chains ).

But Japan makes the global lion’s share of some types of components, such as LCD glass (35 percent), the silicon substrate for semiconductors (50 percent), and a resin used for making substrates to attach electronics chips in smartphones and handsets (85 percent).

At least 11 electronics manufacturing plants are in Miyagi, Fukushima and Iwate prefectures – those hardest hit by the tsunami. They include plants making sensors, switches, high-frequency and input devices, laser diodes and handsets, Venture Outsource reported.

“One report from Credit Suisse states the firm expects supply issues impacting the electronics supply chain will last one to three months,” Venture Outsource reported.

Around the world, people who buy those components, then turn around to sell them elsewhere, are scrambling to snap up remaining inventory of parts expected to see manufacturing delays, experts said.

To contact Senior Staff Writer Trina Kleist, e-mail tkleist@theunion.com or call (530) 477-4230.

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