http://www.ft.com/intl/cms/s/0/ad62904c-44ce-11e5-b3b2-1672f710807b.html#axzz3j8lSpmZW
August 17, 2015 1:04 pm
Companies feel effect of Tianjin blasts as $625m of cars wrecked
Kana Inagaki in Tokyo, and Tom Mitchell and Lucy Hornby in Beijing
Companies including Toyota and John Deere have suspended operations near Tianjin in northern China, widening the supply-chain disruption from the two huge explosions last week at one of the world’s busiest ports.
Five days after the blasts at a warehouse for toxic chemicals killed more than 100 people, multinationals are still trying to gauge the extent of damage on facilities and products. Company officials say that assessing the impact has been difficult as they have been prevented from visiting facilities located as far away as 5km from the site of the explosions.
Chinese state media have reported that 8,000 cars worth an estimated Rmb4bn ($625m) were destroyed in the blasts, including 2,700 made by Germany’s Volkswagen and 1,500 by France’s Renault. Hyundai Motor of South Korea said 4,000 cars parked near the area were damaged while Japan’s Mitsubishi Motors put the potential damage at about 600 vehicles.
“The authorities haven’t told us when we can get back to work,” said Liu Jinghua, a trader at a motor parallel import centre. “We don’t have any cars that were destroyed and our imports are arriving on time, but we won’t be able to get them through customs.”
Toyota, Japan’s biggest car group, said it was halting production until Thursday at two plants in and near Tianjin. The two factories, which are operated with its Chinese partner FAW, produce about 440,000 vehicles annually including the Corolla. Credit Suisse estimates about 1,500-2,000 cars a day are produced per day at the factories.
Toyota said about 50 employees who live near the explosions were injured, including two local dealers who were hurt by broken glass.
Audi, VW’s premium division, said none of its cars were destroyed but anticipates minor damage at one of its warehouses. Some of its employees were among the more than 6,000 evacuated from their homes and are now living in hotels.
“For now, the impact seems limited,” said Credit Suisse analyst Masahiro Akita.
For many of the carmakers, the fallout from the Tianjin blasts is another headache for an industry grappling with slowing economic conditions in the world’s biggest car market.
Outside the motor sector, John Deere, the US maker of agricultural and construction equipment, suspended operations near Tianjin after some of its workers were injured.
Japanese retailer Aeon said on Monday that it did not know when it could reopen a local shopping precinct that was damaged by the explosions. The company said one of its employees suffered a minor injury. China Vanke, the country’s largest housebuilder, said 4,990 residential units were damaged.
While the damage still needs to be assessed, Credit Suisse says a large number of Chinese insurance companies will be affected, with initial insured losses put at $1bn-$1.5bn. A large portion of those losses are expected to be covered by reinsurance.
The explosions also briefly affected off-loadings of iron ore and soybeans, and disrupted the discharge of crude oil and chemicals. But with most berths undamaged, the primary disruption came from the cordoning-off of most of the roads around the northern section of the Tianjin port. Other areas of the port were mostly undamaged.
“In the north part of Tianjin port, the products can’t be uploaded and the roads are all blocked,” said Sam Song, a branch manager at ALS Minerals Division. “Other parts seem unaffected, and there are a few ports starting to be operational.”
Additional reporting by Gabriel Wildau in Shanghai, Simon Mundy in Seoul, Jennifer Hughes in Hong Kong, and Anna Hsieh
August 17, 2015 1:04 pm
Companies feel effect of Tianjin blasts as $625m of cars wrecked
Kana Inagaki in Tokyo, and Tom Mitchell and Lucy Hornby in Beijing
Companies including Toyota and John Deere have suspended operations near Tianjin in northern China, widening the supply-chain disruption from the two huge explosions last week at one of the world’s busiest ports.
Five days after the blasts at a warehouse for toxic chemicals killed more than 100 people, multinationals are still trying to gauge the extent of damage on facilities and products. Company officials say that assessing the impact has been difficult as they have been prevented from visiting facilities located as far away as 5km from the site of the explosions.
Chinese state media have reported that 8,000 cars worth an estimated Rmb4bn ($625m) were destroyed in the blasts, including 2,700 made by Germany’s Volkswagen and 1,500 by France’s Renault. Hyundai Motor of South Korea said 4,000 cars parked near the area were damaged while Japan’s Mitsubishi Motors put the potential damage at about 600 vehicles.
“The authorities haven’t told us when we can get back to work,” said Liu Jinghua, a trader at a motor parallel import centre. “We don’t have any cars that were destroyed and our imports are arriving on time, but we won’t be able to get them through customs.”
Toyota, Japan’s biggest car group, said it was halting production until Thursday at two plants in and near Tianjin. The two factories, which are operated with its Chinese partner FAW, produce about 440,000 vehicles annually including the Corolla. Credit Suisse estimates about 1,500-2,000 cars a day are produced per day at the factories.
Toyota said about 50 employees who live near the explosions were injured, including two local dealers who were hurt by broken glass.
Audi, VW’s premium division, said none of its cars were destroyed but anticipates minor damage at one of its warehouses. Some of its employees were among the more than 6,000 evacuated from their homes and are now living in hotels.
“For now, the impact seems limited,” said Credit Suisse analyst Masahiro Akita.
For many of the carmakers, the fallout from the Tianjin blasts is another headache for an industry grappling with slowing economic conditions in the world’s biggest car market.
Outside the motor sector, John Deere, the US maker of agricultural and construction equipment, suspended operations near Tianjin after some of its workers were injured.
Japanese retailer Aeon said on Monday that it did not know when it could reopen a local shopping precinct that was damaged by the explosions. The company said one of its employees suffered a minor injury. China Vanke, the country’s largest housebuilder, said 4,990 residential units were damaged.
While the damage still needs to be assessed, Credit Suisse says a large number of Chinese insurance companies will be affected, with initial insured losses put at $1bn-$1.5bn. A large portion of those losses are expected to be covered by reinsurance.
The explosions also briefly affected off-loadings of iron ore and soybeans, and disrupted the discharge of crude oil and chemicals. But with most berths undamaged, the primary disruption came from the cordoning-off of most of the roads around the northern section of the Tianjin port. Other areas of the port were mostly undamaged.
“In the north part of Tianjin port, the products can’t be uploaded and the roads are all blocked,” said Sam Song, a branch manager at ALS Minerals Division. “Other parts seem unaffected, and there are a few ports starting to be operational.”
Additional reporting by Gabriel Wildau in Shanghai, Simon Mundy in Seoul, Jennifer Hughes in Hong Kong, and Anna Hsieh
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