JE News: Sichuan Earthquake

13 May, 2008

Many of you have been asking if the earthquake disaster in Sichuan has affected our people or Johnson Electric’s operations.  The current situation is summarized below. Daily updates will be posted on the Johnson Electric website.

Johnson Electric has an iron castings subsidiary near Chengdu, in Dayi County, which is about 100 km away from the earthquake epicenter in Wenchuan County. The 1,500 employees at the plant were evacuated immediately after the quake, and will return to work only after the factory has been inspected and declared safe. Fortunately, there have been no reported injuries to our employees. The Dayi foundry produces iron castings for engine manufacturers in China, and therefore will have no negative impact to Johnson Electric’s customers of motors, switches, actuators or sensors. Even though the Dayi County area was not as seriously damaged as other areas, the disruption to normal life is significant.  Electricity is cut in most areas, telephone lines are down and cell phone base stations are offline. Due to the risk of aftershocks, people have taken to temporarily sleeping in tents or cars. The response of the authorities has been rapid, emergency contingency plans are in place and the army has dispatched 50,000 troops in support of recovery operations in the Chengdu area.

The earthquake did not directly affect Johnson City in Shajing, as the epicenter was 1,500 km distant from Guandong Province.  However, there are 1,200 Johnson City workers who originate from Sichuan Province. The disruption to communications with Sichuan is a source of worry for our staff in Johnson City.  Phone calls to Chengdu are repeatedly busy. JE has set up a management response team to determine how we can provide support to the JE people who have been affected, in all our China locations, and also how to provide aid to the people of Sichuan.

The potential for disruption to the Johnson Electric supply chain has been evaluated. The vast majority of JE’s supply chain is located in South China, Guangdong, the Shanghai area and Taiwan. All have been contacted to confirm that their production capability is unaffected. However, there are 6 suppliers in Sichuan, only 2 of which have not been contacted. I expect that communications with them will be restored in the next day or so.  At this time, there is no adverse affect on production or shipments from Johnson City.

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