Japan Quake Leaves U.S. Production Community Facing Shortages, Price Hikes

Disaster is impacting supplies of HDCam SR tapes and other supplies widely used in TV production

By George Winslow -- Broadcasting & Cable, 3/17/2011 3:10:02 PM

The tragic 9.0 earthquake and subsequent tsunami and nuclear crisis in Japan are beginning to have an impact on professional products for the TV and production industries, with some distributors telling clients they may face shortages in tapes widely used in TV production and other analysts predicting both shortages in electronic components and price hikes in equipment in upcoming months.

One immediate issue was the damage to a Sony plant in the Sendai region in the earthquake zone that was a major producer of tapes and professional products and the shutdown of another Sony plant because of power outages.

As a result, at least two distributors - Comtel Pro Media in Burbank California and Tape Resources in Virginia Beach - were predicting shortages of Sony HDCam SR, and other recording media widely used in TV production.

Some outlets were also restricting sales of HDCam SR tapes, which is often used as a master recording media for primetime TV production because of its high quality.

"Our industry has already been affected by a halt in media manufacturing operations - professional media supply shortages are evident, namely HDCam SR," explained a post on the Comtel Pro Media web site. "Worldwide stock shortages present a realistic threat to our industry and the immediate needs of the television and motion picture production."

TV producers use a wide array of camera systems, many of which have different proprietary formats for recording video, so there are alternatives to the formats and recording media used by Sony cameras. Many of the lighter, less expensive HDcameras, including those made by Sony, use solid state media and inexpensive flash memory cards that remain widely available.

But the shortages in HDCam SR is particularly important for big-budget theatrical film and primetime TV dramas and sitcoms, where high-end Sony cameras play an important role in many productions and the format had been widely adopted by producers, noted David Cohen, CEO and owner of Edgewise Media/Comtel Pro Media.

The tapes are of such high quality that in recent years, a number of productions have moved from film to HDCam SR.

Shortages of the HDCam SR tapes "is a crisis," Cohen explained in an interview. "A lot of people haven't grasped its importance yet, but this will have a worldwide impact that people are going to have to think about and manage."

Amid the devastation, Cohen and others stressed that problems with TV equipment supplies "were nothing compared to the loss of lives and devastation in Japan."

Here, there has been some good news. Most major manufacturers with Japanese operations contacted by Broadcasting & Cable - including Sony, Panasonic and Grass Valley - reported that they had not suffered any deaths or serious injuries among their employees as a result of the crisis.

They also stressed that a number of plants had suffered little damage and that some had already resumed production. 

While consumer electronics manufacturers in Japan had moved a great deal of production off-shore in the last 15 years to China and other lower-cost regions, Japan remains a major producer of semi-conductors and a number of major vendors of professional products for the TV industry maintain factories in the country.

These include Sony, Panasonic, Grass Valley, FOR-A, Hitachi, Canon, Fujifilm, which owns lens producer Fujinon and others, which are important suppliers of cameras, lenses, switchers, and professional media, such as tapes or solid state media, used to record video.

As a result of the crisis, prices for memory chips have jumped, with Reuters reporting a 20% jump in spot prices of NAND flash chips on Monday and another 3% rise on Tuesday.

Market research firm IHS iSuppli estimates that Japan produces about 60% of the silicon used in semi-conductors and that production shortfalls could have a significant impact on global output, producing a "significant shortage of certain electronic equipment, potentially causes pricing for those device to increase dramatically.... However, the global supply chain has about two weeks of excess component inventory in the pipeline for semiconductor parts affected by the quake. Because of this, the shortages are not likely to appear until the end of March or the start of April. Just the same, these shortages and their price impact are likely to linger until the third quarter."

The rapidly rising Japanese yen, which hit levels this week against the U.S. dollar not seen since the mid-1990s, will make products produced in Japan more expensive unless the yen weakens. Power shortages forcing factory slowdowns and the difficulty of transporting materials over quake- and tsunami-damaged roads could also production shortfalls, price hikes and possible shortages.

Even worse problems would emerge if the nuclear crisis is not contained and radiation releases further disrupt the economy, forcing companies to shut down factories and evacuate employees from areas not already impacted by the quake and tsunami.

Sony is still assessing the impact of the damages on its factories, note two Sony spokespeople. Sony has reported "no significant injuries" to its staff in Japan, the company has noted in a press release.

On Monday, the company reported that operations at eight facilities had been shut down, but that one resumed operations on Tuesday.

These facilities include operations in Sendai that were a number of Sony Professional Media products are produced.

Those closures impact production of a number of Sony formats for recordable media, including HDCam SR, HDCam, DVCam, Betacam SP, Digital Betacam, Betacam IMX,Betacam SD, XDCam, SxS, LTO, Blu-ray, DV and HDV, that could limit supplies and boost prices, noted Bob Daly and Mike Cullen owners of Tape Resources in a post on their website to their customers.

"In some cases, a competing manufacturer such as Maxwell or Fuji may have product that is interchangeable with an affected Sony item," they wrote. "However, these manufacturers are also undergoing a huge increase in demand and we are certain to see resultant shortages occur as they ramp up production."

Comtel Pro Media's Cohen notes that companies can adapt to the shortage of HDCam SR tapes by going back to older media or using different camera systems. "The question is how readily available those cameras might be," and the problems producers might face in their workflow when they switch to different cameras and formats during production and post-production, he says.

A more viable solution, he believes, is to recycle tapes. "It is a very robust format" that can be recorded over "multiple times," he says. "We already working with our existing customers to take some existing library tapes [and transfer them to solid state media] so they can be reused."

Grass Valley has two facilities in Japan, one in Kobe that wasn't affected and another in Tokyo that suffered "limited damage," a spokeswoman for the company noted. "All of the employees and their families are safe."

The two facilities produce such products as the company's EDIUS HD editing software, ADVC codec, HD Thunder board, and HD Storm.

Panasonic also reported all its employees survived the disaster without serious injuries, noted a spokesman. The company's Osaka headquarters in the northeast part of Japan was not impacted, but "a few employees working at Panasonic's Fukushima factory and Sendai factory, the Koriyama factory of Panasonic Electronic Works and the Sanyo Tokyo Manufacturing Co., Ltd. factory, which is located in Gunma Prefecture, received minor injuries," he explained.

In the areas impacted by the quake and the tsunami, "some parts of ceilings and walls [in Panasonic facilities] were damaged, but there were no fires or building collapses. Panasonic has suspended operations at the factories in the impacted area. In addition, continuing aftershocks are preventing the company from entering the Sendai and Fukushima factories."

FOR-A employees have reported that they face unscheduled blackouts but remain safe, a spokeswoman noted.

Canon has reported damage to some facilities, including operations in Utsunomiya where it has an optics factory and the company's web site says "time will likely be needed before operations resume" in Utsunomiya.

Pioneer, Mitsubishi Electric, Yamaha, and others have reported no significant injuries to its employees. Yamaha, a major producer of professional audio equipment, has factories in Kakegawa and Toyooka that continue to operate normally.

Dave Walton, assistant vice president of marketing, JVC Professional Products Company, noted in an email that "very fortunately, we know of no JVC employees directly affected by the earthquake or tsunami" and all the U.S.-based JVC employees who were in Japan for meetings have returned home safely.

"Most of our facilities are in Kanagawa prefecture, more than 200 miles away from the northeast area where the most damage occurred," he added. "So far, we have had no reports of significant damage."

Power shortages have, however, affected much of Japan and disrupted operations. "It's too early to know if there will be any NAB shipping delays, or change of travel plans due to the disaster, which is still unfolding," he explained.


Melissa Grego contributed to this story.