Foreign companies around Tianjin blast suspend operations

AP News
|
Posted: Aug 17, 2015 1:19 PM
Foreign companies around Tianjin blast suspend operations

SHANGHAI (AP) — Foreign companies have suspended operations around the Tianjin port as officials scramble to contain the toxic fallout of last week's deadly chemical explosions, which dealt a blow to northern China's emerging economic hub.

Toyota said over half its China production capacity would be offline at least through Wednesday. The company has operations near the blast evacuation zone and said Monday that it had suspended three production lines, which can produce 530,000 vehicles a year.

Thousands of Volkswagen, Toyota, Hyundai and Renault cars, mostly pricey imports, parked on lots near the blast were decimated.

The operations of Panasonic, logistics company Singamas Container Holdings and Deere & Co. have also been disrupted.

The list of name-brand companies impacted by the blast is a testament to Tianjin's rise, but regulatory and safety lapses at the hazardous goods warehouses that exploded have drawn attention to the sometimes shaky infrastructure China has laid down as it pursues ultra-fast growth.

The port lies at the heart of one of China's new free trade zones, designed to draw foreign investment and create an economic hub for China's northeast that could one day rival the Pearl and Yangtze river deltas. The broader Binhai New Area has long been on the radar of Beijing's technocrats, who hope to integrate Beijing, Tianjin and Hebei into a single, thrumming economic powerhouse.

"This wasn't just an incident in some third-rate city. It was right at the heart of everything," said Chet Scheltema, regional manager at international business consultancy Dezan Shira & Associates, who has lived and worked in Tianjin.

He said the explosions called attention to deficiencies in China's soft infrastructure of safety standards and emergency preparedness, which are usually overshadowed by China's shiny skyscrapers and impressive roads.

"There's still a lot to be done that's not immediately obvious," he said. "When you're trying to recruit your CEO and his or her family from the U.S. and they see these kinds of things on TV, or their family and relatives see this, they start to talk and think, should I really be going to China? Are they really the state-of-the-art economy we thought they were?"

Airbus built its first assembly line outside of Europe in Tianjin, which turns out four A320 aircraft per month. Spokesman Jacques Rocca said its facilities were unaffected. "We are evaluating what could be the impact in the coming weeks, but it will depend on the capability of the port of Tianjin to recover its activity," he said.

The Tianjin Maritime Bureau said Monday that 85 ships had been delayed or canceled, but that port traffic is now normal.

Some shipments to Tianjin have been diverted to other regional ports, raising transport costs but minimizing overall economic impact, said Roberto Giannetta, secretary general of the Hong Kong Liner Shipping Association. "Damage to containers and cargo has been extensive," he said, adding that those losses, difficult to estimate at this early stage, would be borne by insurance companies.

Operations at the port are "slowly returning," Giannetta said.

Genscape, which monitors commodity and energy markets, has documented normal oil and petrochemical tanker traffic at the port. Fishing boat traffic fell by half the day after the blast, but has now partially rebounded, said Amir Bornaee, an oil analyst at Genscape.

Panasonic, which has a product development center 5 kilometers (3 miles) from the blast site, kept its offices closed Monday, out of safety concerns. A spokeswoman said executives were still evaluating whether to open Tuesday.

Singamas Container Holdings told the Hong Kong stock exchange Monday that it suspended operations at two depots close to the blast and lost contact with one employee. The company did not anticipate a material impact on business.

U.S. farm equipment maker Deere & Co. said it suspended production at its facilities about six kilometers (four miles) from the explosion site. It planned to resume operations later this week after cleanup and inspections.

Automakers have been hit because Tianjin is one of China's major ports for car imports. Volkswagen lost around 2,700 vehicles. Renault said 1,500 Koleos SUVs were damaged. Hyundai said it had around 4,000 vehicles, mostly high-end cars, parked at the site.

___

Associated Press writer Kelvin Chan in Hong Kong and researcher Fu Ting in Shanghai contributed to this report.