Business

Prolonged Brexit uncertainty frustrating Japanese companies

JIJI

Japanese manufacturers are growing frustrated yet again over another delay in Britain’s withdrawal from the European Union, as the prolonged confusion is raising concerns over disruptions to their businesses and supply chains.

Britain is expected to postpone their withdrawal from the union, previously slated for the end of this month, to avoid a “no-deal” Brexit scenario that would disrupt the flow of goods between the Britain and the EU.

Many Japanese companies had been stockpiling parts in anticipation of a worst-case scenario, as supply chains for manufacturers would be severely affected by such a no-deal Brexit.

Automakers were especially wary of a no-deal scenario, as some 20,000 to 30,000 parts are necessary to build an automobile. To combat this, Honda Motor Co. increased stockpiles of parts at its British factories ahead of the October deadline to about three days’ worth of goods.

Toyota Motor Corp. also increased its stocked parts, and will suspend operations at its British plants on Nov. 1 to prepare for any unexpected turn of events. However, Toyota sees limits to its ability to deal with a potential crisis, as the company employs a just-in-time manufacturing system (JIT) that sees parts used in the manufacturing process delivered as they are needed for better efficiency.

“It is possible that a no-deal departure could halt our British plant operations for several weeks,” a company official said.

Drug maker Eisai Co., which has a factory in Britain, increased its stocks to about double the standard amount, or up to six months’ worth, at its locations across Europe to deal with a potential no-deal Brexit.

“We are doing whatever we can to ensure our supplies of goods to British and EU patients do not falter,” a public relations official with the company said.

The trade ministry and the Japan External Trade Organization, or JETRO, set up a hotline earlier this month to support companies affected by Brexit. The initiative gives advice mainly to small companies, including parts makers, on ways to deal with potential disruptions to the flow of goods in the event of Britain’s departure from the EU.

“We listen to individual concerns (from companies) and show them measures taken by other companies and others,” a trade ministry official said.

The prolonged confusion on the fate of Brexit also threatens to impair companies’ abilities to craft strategies in the European market.

“We are waiting for a clear announcement on trade relations between Britain and the EU,” a Nissan Motor Co. representative said, calling for clarity amid growing uncertainty over Brexit.

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