Consequences for the Camera Industry after the Japan Earthquake: Prices Will Increase
You didn’t need a Nobel Prize in economics to know that the Japanese stock market would take a hit after the earthquake on March 11, but nevertheless here are the stock prices of the 6 major camera makers in Japan, with graphs covering the last 3 months approximately (generated by the Tokyo Stock Exchange website). Note the dip after March 11 (follow the blue line), then the start of a recovery…and then a turn for the worse in all cases over the last 1–2 weeks. Hoya’s tumble (they’re the owners of Pentax) is the most worrying, while Canon’s might not be apparent because they’ve been in decline since December last year. Olympus might be the only one hanging on to their recovery.
Reading stock price graphs is a bit like reading tea leaves—the future may not become clear to you, but you’re left with a strong need to use the lavatory afterwards. Having said that, I will attempt the oft-repeated trick of predicting the future, at least as it pertains to photographic gear produced in Japan.
The Short Version
Prices will go up soon, which you might have guessed if you paid attention to the title of this article.
The Long Version
Japan was hit by a double-whammy: An 8.9 magnitude earthquake followed by a tsunami. Then Mother Nature went for the hat-trick and added nuclear fission into the mix; with electricity cut, and having been hit directly by the tsunami (right after the earthquake), the Fukushima Dai-ichi nuclear power plant suffered a chain of failures and accidents that has left it crippled and on the verge of a nuclear emergency. This powerplant is located in NE Japan, the area most affected by the earthquake+tsunami, and the region where the main camera companies have factories. These factories were initially closed down, only to tentatively reopen 1–2 weeks later, but production has been intermittent and might even come to a halt. Below is a list of reasons why the natural and nuclear accidents are conspiring against the camera industry in Japan, and indeed, all industry in Japan:
- The earthquake cracked roads, slowing down deliveries to and from factories.
- The earthquake and tsunami damaged factory buildings, necessitating repairs that impaired manufacturing in the meantime.
- Aftershocks have been felt for over a month, some of them quite severe, impairing production, and even stopping it when the tremor is bad enough that a factory has to be evacuated.
- Access to running water can be problematic because of broken pipes or contaminated water supply. You can’t run a factory without water.
- Power outages are commonplace, and having the local nuclear power plant down doesn’t help when trying to run a power-hungry factory.
- Factory workers who have been displaced from their homes by the earthquake/tsunami/nuclear-safety-zone might not be able to work, and if they do, they might not be at their best, necessitating more time to finish a task.
- The issues affecting camera factories are affecting all other Japanese factories too, including smaller ones that manufacture single items such as screws, rubber rings or electronic components. When one of these factories can’t deliver their items on schedule, the camera factory can’t manufacture products that require these items. Most often it’s the small things that cost you big when a crisis like this hits your factory.
- Ports are not operating at full capacity due to damages sustained, thus limiting the number of cameras and lenses being exported.
- The glass used in lenses is not easy to come by; you need good quality raw materials and advanced manufacturing technology. If Japanese glass isn’t available, Chinese glass isn’t going to cut it (will Korean?). Will you pay full price for a Canon L lens using Chinese glass? I can just see the camera forums erupting in chaotic swearing fits should this happen.
The Japanese are renowned for their tough work ethic, but that won’t get them through weeks of power outages, missing parts, weakened transport lines and human loss. Adding to these problems is the small amount of current stock stored in their warehouses. Japanese companies have slimmed down over the years, streamlining their operations to increase benefits. One of the techniques they use is called just in time production, whereby they produce just enough product to meet demand, thus cutting down on warehouse storage costs. There are other benefits to this system, such as allowing a company to respond quickly should a defect be found in one of their products; instead of finding themselves with thousands of defective units they have to fix or throw away, they can make changes to the production line and start producing non-defective units right away, saving time and money; this is a win-win situation for both the company and the clients. The problems arise when production is halted or slowed down significantly, then they find themselves unable to meet quotas and can’t send their distributors enough units to meet demand. A basic tenant of economics is that when demand exceeds supply, prices of available units will increase.
In the coming weeks, even months, Japanese camera makers will not be able to produce enough equipment to meet market demand, so I expect the prices of cameras and lenses to increase. How much? I don’t know. For how long? I don’t know, either.
If you were planning on purchasing a new camera or lens in the near future, I would suggest you do so as soon as possible—some brands have already seen increased prices. If you wait, you may also find there isn’t any stock at all, like with the Fuji X100, that is currently backordered almost everywhere. Of course, if you make these hasty purchases through our affiliate stores, good Karma will come your way.
Feel free to ignore my fortune-telling tales of woe. I may very well be wrong and Japan will show the World it is able to pick itself up, rinse the radioactive water from out its shoes and rebuild in 4 weeks. I, for one, would be very happy if they did.
Good light, and good luck,
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Tags: Cameras, Earthquake, Economy, Japan, Lenses, Photography, Stock Market