May 18, 2012
In October 2011, Nikon’s DSLR camera factory in Thailand was devastated by flood waters, which caused the complete shutdown of its entry-level and mid-range DSLR production lines right before the critical holiday season.
In its year-end Fiscal results, Nikon highlighted the events and its recovery timeline.
- October 6, 2011: Operations suspended at Nikon Thailand Corporation (NTC) due to the fact that the factory was submerged under 2 meters of flood waters. The flood came at a critical time of the year, when all camera manufacturers were gearing up for the all-important holiday season and beginning production ramp up of soon-to-be announced cameras.
- November 30, 2011: Nikon restarted partial deliveries of DSLR cameras and interchangeable lenses thanks to alternative production by Thai partner factories.
- January 3, 2012: Partial operations resumed at NTC, as Nikon had forecasted would happen back in November.
- January to March 2012: NTC ramped up its camera production, adding to finished goods produced by partner factories.
- By the end of March, the combined production capacity of NTC and partner factories had reached normal production levels.
Nikon estimates that it spent approximately ¥26 billion ($325 million USD) replacing equipment and repairing the NTC building. Insurance proceeds were ¥15.9 billion ($198 million USD) last year and another ¥7 billion ($88 million USD) payment is expected this year.
While the floods caused shortages in DSLR cameras, Nikon’s 1 Series compact interchangeable lens cameras (CILCs) were unaffected, since they are produced in China. Although Nikon would probably have liked to have had a choice in the matter, redirecting its marketing focus to the 1 Series cameras probably contributed to the fast start that these cameras got coming out of the gate.
With this latest disaster behind it, Nikon is looking forward to a significant increase in sales of digital interchangeable lens cameras (DILC) this fiscal year. The company is forecasting worldwide sales of 7.0 million DILCs, up from 4.7 million in FY2012. While the company does not split out sales of DSLRs and CILCs, much of this growth target likely rests on the continued success of the Nikon 1 Series CILCs.
Digital interchangeable lens cameras are expected to account for over 50% of total U.S. digital camera market revenue by 2016. DSLRs continue to account for the majority of sales in this market but CILCs are now gaining ground. To keep up with the changes in this market, InfoTrends will be examining DILCs’ impact on the digital photography market through its newest multi-client study entitled The 2012 U.S. Interchangeable Lens Camera Market. Click on the link to learn more about this latest study.
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