Without going into a dissertation worthy of a 2 hour episode on the History Channel, the reason we have so much high tech manufacuring in places prone to earth quakes is that is where the population centers are. For millenia humanity has been drawn to shorelines. Throughout history oceans. seas and lakes have been a a source of food, energy for running mills, and for trade routes. Many great cities are on shores, lakes or rivers. As it happens many of the tectonic plates meet up and form shorelines. Volcanic soil is rich in nutrients. So people are drawn to these regions. At this point, it would be darn near impossible to move most of the world's population to more stable locations.
Where do you want to put high tech manufacturing? The American mid-west is inviting until you figure there is also the New Madras Fault near St. Louis. Also, the Mississippi has been known to have severe floods and they also call the region Tornado Alley. The American Southwest (west TX, NM, AZ, NV, UT) is stable. But most of it can be inhospitable. While the population is relatively sparse the southwest is already dealing with water supply issues.
The Gulf coast has to deal with hurricanes.
Mexico has its volcanoes and earthquakes, especially in central Mexico and a little bit of a problem with Narco terrrorism.
If you go to Brazil you will accelerate the destruction of the rain forest to accomodate more people and manufacturing.
Central China has lots of room and its share of earthquakes.
We can list a lot of pros and cons for every region on Earth. But the key element is where is the talent and the knowledge?
The answer is to spread manufacturing around the world to minimize the impact of a major natural disaster. As we see developing in Japan, the supply chain has been disrupted, but it is NOT broken. Companies are figuring out how to work around problems while also getting these impacted sites back on line.
My opinion is that Japan is still a stable location for high tech manufacturing. The reason is that the purest and most highest form of technology is being produced in Japan. The Japanese culture has already been known for its strength in miniscule details and research. China or other Southeast Asia countries just cannot produce the type of precision that would be required. It's not that they can't but it's just the culture hasn't been that way. I am Chinese and I would clearly prefer a product made in japan than in China.
This is a strong point that the investors have to add to the strategic plan when deciding on where to establish the plant. Though the situation in Japan triggered this question but the same question appplies to all. I will not deny the fact Japan can still be a stable location for high tech Manufacturing because of some factors:
1. What made Japan a chosen location in the past? As long as the factors still remain, that is the key for the business.
2. There is no business without the associated risk. The question of instability could be part of the risks.
Claifonia, USA has recorded earth quake and tremor events, yet the state is the citadel of technology. But we can not limit the business practices in the entire USA because of Califonia, All areas in Japan may not be proned to great disaster like the current one. Manufacturers have to strategically plan to minize the risk.
To all of you who have commented on this article, let me thank you for reading it and say that I find these comments very interesting.
Jbond said: “One thing that can come out of this is other regions taking advantage of the seismic activity that goes on in areas like Japan, China and California, and try to set up new manufacturing areas that aren't as susceptible.”
Dave Sasson said: “It would make sense that high-tech manufacturers located solely in Japan should look to implement a business continuity strategy that could include additional plants located outside Japan.”
Anandvy said Japan is “not a stable location for high-tech manufacturing anymore.”
Mfbertozzi agrees with Anandvy.
Adeniji Kayode said it won’t be safe to “make Japan the only or main location for high- tech manufacturing.”
Barbara Jorgensen said there are problems everywhere and “end-markets should simply adjust their expectations and realize such things happen.”
Eemom agrees with Barbara and says “It is most advisable however, to have diverse manufacturing capabilities in several areas so that if a disaster occurs, manufacturing can be shifted elsewhere.”
What the Japanese earthquake and its impact on high tech manufacturing has taught us is that these events could and should provide an opportunity for supply chain and C-level executives to change the way they assess the choice of a manufacturing location.For consumers, these events could allow them to be more flexible in their thinking on issues like price, the timing of a product release, and other expectations they may have. I would say that such a shift in thinking could alter our entire approach to high tech manufacturing.Congratulations to you all!
I agree. It is hard to "plan" for natural disasters or political unrest. Sometimes, things happen that will affect lead times and consumers need to adjust their expectations. It is most advisable however, to have diverse manufacturing capabilities in several areas so that if a disaster occurs, manufacturing can be shifted elsewhere. I hope companies do take advantages of other areas besides China since our over dependence on China is unhealthy.
This is a valid question, but looking back on recent events, some qualify as "100 year" events, such as snowstorms in the Northeast, Hurricane Katrina, volcanic eruptions...certainly areas are earthquake-prone, but unfortunately there is no way to predict when a disaster on the level of Japan's will strike. Then we have factors such as the political upheaval in the Middle East. Mexico has been known to have its political problems...it's a very difficult risk-management equation. Sometimes I think that end-markets should simply adjust their expectations and realize such things happen and put less emphasis on time to market.
Anandvy and all, I agree; if we focus on natural dangers, we could say it couldn't be a stable location; anyway knowledge and culture of microlectronics were born exactly there, then they could be key drivers to hold manufacturing leadership from Japan also in the future, what do you think about?
I feel the answer is "NO". Its not a stable location for high-tech manufacturing anymore. I am surprised most of the hightech manufacturing plants are present in Japan and Taiwan both of which are highly prone to earthquakes and tsunamis. Its high time companies should start thinking about moving these facilites to safer locations so that in future supply distruption doesn't occur.
It would make sense that high-tech manufacturers located solely in Japan should look to implement a business continuity strategy that could include additional plants located outside Japan.Japan is a country with a lot of seismic activity, roughly 1,000 earthquakes a year that can be felt.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.