By on May 30, 2011

The Development Bank of Japan is planning a bailout found for Japan’s hard-hit auto parts industry. The parts industry took the brunt of the March 11 earthquake and tsunami, and it is parts shortages that hold up a speedy recovery of Japan’s largest industry sector. According to the Yomiuri Shimbun, the DBJ plans to raise 50 billion yen for the fund.

The bank will ask major financial groups and the Japan Auto Parts Industries Association to invest in the fund. With the assistance of the association, the DBJ will select beneficiaries of the fund.

Money will go to major auto parts manufacturers,  with the expectations that these makers then invest in subcontractors.

According to the Yomiuri, there are about 800 major (Tier 1) auto parts manufacturers. They purchase smaller parts from about 4,000 (Tier 2) companies that are below them, which do business with about 20,000 companies below them (Tier 3 and lower).

That would make a total of roundabout 25,000 companies. 50 billion yen convert to $617 million. Evenly distributed, the fund would come to roundabout $25,000 per company. By the sounds of it, it won’t be evenly distributed. It’s a bailout with a teaspoon.

(Part 2 of the video is here. Part 3 is here. Part 4 here.)

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