Japan to finance quake-hit car parts makers

Japan's government-owned bank is planning to set up a 50 billion yen ($617 million dollar) fund to support auto parts makers hit by the March 11 quake and tsunami, an official said Monday. The Development Bank of Japan will launch the fund in June, asking major commercial banks for investment, the bank official said. "The East Japan Great Disaster seriously damaged supply chains of auto parts makers, and we have been discussing possible financial support for them," said the official, who declined to be named. "Our negotiation is in the final stage," the official said. "The size is likely to be as big as 50 billion yen," he said, adding that the bank is scheduled to make an official announcement soon. Under the plan, the bank will offer the investment to the Japan Auto Parts Industries Association, which will then provide cash for its member firms as well as their subcontractors. Japan has 800 major auto parts manufacturers supplying interior equipment and parts such as air conditioners to the nation's automakers. Under these major auto parts makers, there are some 4,000 subcontractors and 20,000 sub-subcontractors, according to local media. Japanese auto giants Toyota and Honda saw global production halved in April as the disaster ravaged supply chains, the companies said Friday. The quake and the resulting tsunami shattered component supply chains and crippled electricity-generating facilities, including a nuclear power plant at the centre of an ongoing atomic emergency. Amid power and parts shortages, Toyota had announced production disruptions domestically and in the United States, Europe, China and Australia because of the crisis, temporarily slowing output or shutting plants. Many component manufacturers that are key to auto production are based in the worst-hit regions of Japan, their facilities damaged by the 9.0 magnitude earthquake or inundated by the giant wave that followed. While most plants resumed production by mid-April, operations remain well below capacity and analysts warn parts shortages could go on for months, with the threat of summer power shortages also casting a shadow over the economy.