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August 27, 2013 Nissan Motor Resiliency Company Ltd.: Building Operational William Schmidt, David Simchi-Levi On March 11, 2011 a 9.0-magnitude earthquake, among the five most powerful on record, struck off the coast of Japan.

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August 27, 2013 Nissan Motor
Resiliency Company Ltd.: Building Operational William Schmidt, David Simchi-Levi On March 11, 2011 a 9.0-magnitude earthquake, among the five most powerful on record, struck off
the coast of Japan. Tsunami waves in excess of 40 meters high traveled up to 10 kilometers inland
and three nuclear reactors at Fukushima Dai-ichi experienced Level 7 meltdowns. The impact of this
combined disaster was devastating, with over 25,000 people dead, missing or injured.1 Governments,
non-government agencies, corporations and individuals in Japan and around the world responded with
relief teams, supplies and donations to help ease the suffering and support the recovery.2 In truth, the
disaster was three calamities in one – an earthquake, a tsunami and a nuclear emergency. Recovering
from such a catastrophe was unprecedented.
The event was not just a humanitarian crisis, but also a heavy blow to the Japanese economy: 125,000
buildings were damaged and economic costs were expected to be ¥16.9 trillion.3 In the weeks
following the disaster, approximately 80% of Japanese automotive plants suspended production and
Mitsubishi UFJ Morgan Stanley Securities estimated utilization at other plants were below 10%.4 1 Ministry of Foreign Affairs, Government of Japan, http://www.mofa.go.jp/j_info/visit/incidents/index2.html, accessed July 15, 2012. 2 Ministry of Foreign Affairs, Government of Japan, http://www.mofa.go.jp/j_info/visit/incidents/pdfs/r_goods.pdf, accessed July 15, 2012. 3 Ministry of Economy, Trade and Industry, Government of Japan, http://www.kantei.go.jp/foreign/policy/documents/2012/__icsFiles/afieldfile/2012/03/07/road_to_recovery.pdf, accessed February 27, 2012.
4 Tsuyoshi Mochimaru, “Auto sector: Our Stance in Wake of Recent Earthquake,” Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., April 12, 2011. This case was prepared by David Simchi-Levi, MIT Professor of Civil and Enviornmental Engineering and Engineering
Systems and Co-Director, Leaders for Global Operations, and William Schmidt, PhD candidate, Harvard Business School.
Copyright © 2013, David Simchi-Levi and William Schmidt. This work is licensed under the Creative Commons AttributionNoncommercial-No Derivative Works 3.0 Unported License. To view a copy of this license visit
http://creativecommons.org/licenses/by-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San
Francisco, California, 94105, USA. NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
William Schmidt, David Simchi-Levi Across the industry, monthly production dropped nearly 60% in March and April 2011 compared to
2010, and did not fully recover until October.5 Production for all of 2011 was down 9%.6
Markets outside of Japan were affected as well. Toyota, Honda and Nissan, the three major Japanese
automotive original equipment manufacturers (OEM), exported a significant amount of their Japanese
production to serve foreign markets (Exhibit 1). Declines in Japanese production impacted product
availability in those export markets. In addition, overseas production had expanded in recent years,
but only 70% – 80% of the production components were sourced locally with the remaining 20%

 
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