Sun, Jan 02, 2005 - Page 11 News List

Disaster `still a wild card' in Asian economy

SUPPLY CHAIN The tsunami-devastated region's manufacturing base seems to have escaped the worst destruction, but analysts warned against delayed repercussions


US businesses dependent on manufacturing and raw materials from southern Asia say that so far, there have been few major disruptions in their supply chain from the tsunami-devastated region.

Some firms, however, haven't tried yet to assess any possible damage or supply problems -- they're still trying to determine whether employees and their families are safe.

"Let's see who is alive before we worry" about shipments, said Frank Spadaro, president of Spadaro International, a US custom freight forwarder.

Companies are also waiting to see what the possible long-term impact of disease might be on the southern Asia work force and whether the economies of battered nations such as Thailand, Sri Lanka, Indonesia and India can continue to function as they deal with the disaster.

"The major risk that is still out there is the disease fallout and any kind of disruption that causes," said Jim Duffy, an analyst who tracks Nike Inc, Reebok Inc and other major manufacturers and retailers of sports apparel for San Francisco-based Thomas Weasel Partners.

The impact of the disaster on national economies is "still a wild card," he said.

Commodities trading since the disaster has reflected few serious worries over the delivery of rubber, palm oil and other raw materials the regions produce.

Importers of Indonesian coffee beans and Sri Lankan tea leaves could turn elsewhere to meet any supply shortages, said Scott Meyers, a senior analyst with Pioneer Futures in New York.

"I don't think people are going to start panicking over tea," Meyers said. "China has enough."

The region's manufacturing base was not devastated because many factories are located on higher ground farther inland. Major transportation hubs such as airports and ports have also been largely unaffected.

The timing of the tsunami -- the day after Christmas -- may have helped ease the impact on businesses, particularly the apparel industry, which schedules most shipments to accommodate big sales before the holiday.

"A lot of the big manufacturing deadlines that had to be met were met," said Marie Connell, spokeswoman for Irvine-based BAX Global Inc, a logistics and freight forwarding firm that employs 3,800 people in 54 offices across 15 countries.

"There may be some minor delays with schedules, but we're not seeing anything significant at this point," she said.

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