Prolonged Brexit Uncertainty Riles Japanese Companies

Economy

Tokyo, Oct. 27 (Jiji Press)--Japan's industrial world is responding to the likelihood of yet another delay for Britain's withdrawal from the European Union with irritation, as the prolonged confusion forces companies to stay on high alert for disruption to their business on the island nation.

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

Many Japanese companies had been stockpiling goods in anticipation for the worst-case scenario, as supply chains for manufacturers would be severely affected by 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. <7267> increased its stock of parts in its British factories ahead of the end of October to about three days' worth of goods more than usual.

Toyota Motor Corp. <7203> also increased its parts stock, and will suspend operations at its British plants on Friday, Nov. 1, to prepare for unexpected turns of events. However, Toyota sees limits to its ability to deal with a potential crisis, as the company employs a production system that makes it hold as few auto parts as possible for the sake of efficiency.

[Copyright The Jiji Press, Ltd.]

Jiji Press