Japan’s economy will quake for some time

On the heels of a global recession, we watch helplessly as the world’s third largest industrial power faces all the terror that Mother Nature can throw at a country — all compressed into days and hours.

“It is difficult to imagine another industrial economy as inherently insecure as Japan’s.”

— George Friedman, STRATFOR

On the heels of a global recession, we watch helplessly as the world’s third largest industrial power faces all the terror that Mother Nature can throw at a country — all compressed into days and hours.

Japan, a country of some 130 million people living in a geographic space about the size of Vancouver Island, literally lives on the brink.

There are no fossil fuels in Japan, virtually no mineral resources, and the country has had to come back from massive devastation after the Second World War’s atomic bombing of Hiroshima and Nagasaki. The country sits on the brink of the Pacific ‘ring of fire’ fault line and regularly experiences earthquakes.

But nothing like this.

Despite the lack of mineral resources and fossil fuels, Japan has become a world leader in scientific innovation, high-tech design and production, and manufacturing of some of the smartest electronics and electro-mechanical devices on the planet.

Its rise has been powered by its people’s incredible determination, it’s internal banking and corporate infrastructure, which is committed to business success through a process of acceptable failure as a learning curve — unlike the West’s rather bon vivant ‘sink or swim’ attitude of most government agencies and banks to their small and medium-sized business clients.

And Japan has both built some 55 nuclear plants to provide energy, it also imports some oil from the Middle East. Well — that was until that oil supply chain became disrupted by rolling revolutions.

Then the earthquake and tsunami hit.

And now the nuclear challenge.

Until 2002, Japan was Canada’s second largest trade partner after the U.S.; now eclipsed by China, the U.K. and Mexico. As Canada’s No. 4 trading partner in terms of imports, Canadians typically receive automobiles, engines and parts; electronic goods and gadgets; aircraft parts; transmission and “Longitudinal submerged arc welding transportation pipes (external diameter over 406.4 mm)” — which I don’t know what that is but I am guessing it will be important to oil and gas industries.

Right now, besides the critical condition of the Japanese population — especially those devastated by tsunami, cold weather and collapse of utility services in the north, and the risk of critical radioactivity from Fukushima — the country is also faced with burdensome challenges regarding its industrial future.

Many key ports are seriously damaged from the tsunami. Container gantries — those huge stationary cranes — are toppled at some key ports. This means delivery of raw minerals for production will be slowed or impossible in some areas.

Inside the country, infrastructure like roads and rail service and even commuter trains means that some factories would have trouble shipping raw goods in for manufacturing (if they could get them to port) and sending manufactured product out for export and sale.

As the nuclear disaster has impacted all of the nation’s nuclear energy system (which provides some 24 to 30 per cent of all power), it has also become challenging to get in oil supplies from the Middle East — in part due to the chaos there; in part due to the chaos in ports and infrastructure challenges as above.

To restore manufacturing and normal life, all operations and individuals need electrical power. It pumps gas, water, natural gas; it turns on lights and manufacturing equipment; it makes hospital equipment work and provides light and sterilization tools for surgeries.

It’s what differentiates us as ‘modern’ humans from people in Third World nations. Captured energy allows us to magnify and multiply the efforts of the single individual into the awesome productive power of a robotic manufacturing plant.

As George Friedman points out in his STRATFOR article Japan, the Persian Gulf and Energy, the cruellest blow of the recent events is as much psychological as physical to the Japanese.

“Japan’s problem is that its enormous industrial plant is built in a country almost totally devoid of mineral resources. It must import virtually all of the metals and energy that it uses to manufacture industrial products. It maintains stockpiles, but should those stockpiles be depleted and no new imports arrive, Japan stops being an industrial power.”

To mitigate their dependence on oil or nuclear, Japan is also the world’s largest importer of seaborne coal — from Australia. But that country has just had massive flooding and disabling of many of its coal mines!

The Japanese are resilient and brilliant. It will be extremely difficult to overcome the present horrors and they may not be over yet. But there will be significant domestic economic earthquakes in Japan as these energy and material supplies and manufacturing come to a crunching halt. And I have no doubt that the ripples will be felt, strongly, in Canada too.

Michelle Stirling-Anosh is a Ponoka-based freelance columnist.