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Japan's tsunami disrupts operations for Diebold's component suppliers

Diebold is working with its engineers to consider the feasibility of substituting the current component with one from another supplier.

May 2, 2011

Japan's March 11 earthquake and tsunami disrupted operations for some of Diebold Inc.'s component suppliers, and company officials are studying several ways in which to resolve the problem.

Thomas W. Swidarski, president and CEO of Diebold, said Wednesday during the ATM manufacturer's first-quarter conference call that the tsunami caused mid-to-long-term supply disruption to certain second- and third-tier component suppliers.

The 9.0 earthquake, the fourth largest recorded since 1900, struck off of the coast of Honshu, Japan, the country's most populous island. Following the earthquake, the tsunami flooded the industrial city of Sendai with 23-foot waves. Sendai is located on Japan's northeastern coast.

Diebold does not have any direct operations in Japan; therefore, no Diebold employees were killed or injured. Swidarski did extend the company's sympathies to families who lost loved ones in the disaster.

One component that is affected uses Diebold's currency-recycling products and passbook printers. The component is manufactured in a plant damaged by the tsunami, said Mike Jacobsen, a spokesperson for Diebold, which is based in North Canton, Ohio.

"As a result, we are extending lead times to customers to those affected parts. The lead times vary by customer," Jacobsen said. "In addition Diebold's procurement organization is working directly with the unnamed supplier to determine current inventory levels and its plans for getting the plant back online."

Once order-level impacts are determined and confirmed, Diebold will contact affected customers, Jacobsen said.

Diebold, the world's third-largest ATM manufacturer based on annual shipments, also is considering other options.

The manufacturer is working with its engineers to consider the feasibility of substituting the current component with one from another supplier.

The earthquake and tsunami also have prompted Diebold officials to identify any other potential risks to its supply chain, Jacobsen said.

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