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Canon close to supply recovery

May 25, 2011: Canon anticipates its earthquake- and tsunami-hit supply chain will recover faster than originally estimated, according to a Reuters report this week, while Nikon’s supply situation remains less clear.

This supports comments from Canon Australia reported in Photo Counter earlier this month.

The fast recovery will boost Canon’s annual sales by roughly 50 billion yen (A$578 million), according to the company’s chief executive, Fujio Mitarai (pictured right).

Mr Mitarai also told Reuters that the company may expand a factory under construction in Kyushu, southern Japan, as part of a strategy to diversify its production of key parts.

He said original estimates of a return to normal supply chain operations in late June or July were now revised forward to early June.

A local Canon Australia spokesperson commented: ‘We’re very encouraged by the great work that our colleagues in Japan are doing with their recovery activities, and this is further evidence of it.

‘As mentioned the other day, the updates from Japan show that supply continues to be better than earlier expected.’

One of the biggest risks facing the company, said Mr Mitarai (and this will apply to many Japanese-based manufacturers) was a potential power shortage following a nuclear power plant shutdown in the quake-hit northeast.

As part of its strategy to diversify is production base for key parts, Canon may eventually beef up operations at its Hita factory in Kyushu, which is currently under construction, Mr Mitarai said.

Mr Mitarai also told Reuters his company was also considering increasing production lines at its two factories in southern China’s Guangdong province.

The disruption of parts supply in Japan has affected a wide range of electronics makers, including Apple and Texas Instruments. Printer manufacturer Xerox (Fuji Xerox in this market) also anticipated manufacturing constraints and did not expect full recovery until later in the year.

Nikon has been more equivocal in recent comments on supply. In meetings with the Japanese business press last week it said that, although all plants were back in production, this didn’t mean they were manufacturing at the same rate as prior to the disaster.

At the briefing the company reiterated previous statements in which it said it anticipated supply constraints at least until August. Nikon Australia declined to contribute any further comment.

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