Quake Aftermath Severe, Deep Auto Sector Impact
By Bill Visnic March 16, 2011
As loss of life and the human impact of Friday’s devastating earthquake and subsequent tsunami continue to be assessed in Japan, the nation also is coming to terms with the disaster’s titanic effect on its infrastructure and economy.
Monday brought more thorough reports of the extent of damage in Japan, where the earthquake – the fifth largest in recorded history – and tsunami combined to wrack the northern portion of the country, where much of the region lies in ruin. With numerous auto-industry assembly plants and supplier operations dotted throughout the area, Japan’s auto production has all but ceased at least for this week – and potentially longer for some automakers.
Toyota Motor Corp. president Akio Toyoda said in a statement, “I offer my prayers to all those who lost their lives in the March 11 Tohoku Earthquake and its ensuing aftermath, as well as my sympathy to the survivors and their families. Not only is the struck region one of our production bases,” he continued, “those directly hit and vastly affected include our dealers, suppliers and numerous other partners. With life the number-one priority, we want to do all we can to contribute to the relief efforts."
“Bottom line: we are happy no one is hurt [at our Nissan facilities]. We can build new cars,” said Nissan Motor Co. Ltd.’s Andy Palmer, executive vice president in charge of corporate and product planning.
Affected Assembly Plants
• Toyota, the nation’s largest automaker, said all production will cease from March 14 through March 16. While TMC plants were able to restart production last week, the company said, plants that stopped production are Toyota subsidiary plants that produce parts and vehicles, including Toyota Motor Hokkaido Plant, Toyota Motor Tohoku Plant, Central Motor Corporation Miyagi Plant (which also produces the Yaris model), and the Kanto Auto Works Iwate Plant (which also produces the Scion xB and Scion xD). Consultant firm IHS Global Insight reported Toyota’s shutdown would lead to loss of 40,000 units of production and that overall, Toyota had shutdown 45 percent of its global production.
• As of today, Honda Motor Co. Ltd. suspended all production activities at the following assembly plants until March 20: Sayama Plant at Saitama Factory (Sayama, Saitama), Ogawa Plant (Ogawa-machi, Hiki-gun Saitama), Tochigi Factory (Moka, Tochigi), Hamamatsu Factory (Hamamatsu, Shizuoka), Kumamoto Factory (Ozu-machi, Kikuchi-gun, Kumamoto). and Suzuka Factory (Suzuka, Mie). Honda said it also will suspend regular operations at all Honda facilities in the Tochigi area, “where damage was more serious,” including the Tochigi Factory, Honda R&D Co., Ltd. R&D Center (Tochigi), and Honda Engineering Co., Ltd. “and focus on the recovery of each operation.” The company said the closures will result in the loss of about 16,600 units of production, including about 2,500 cars that would have been sent to the U.S.. Those models include the Fit, Insight hybrid and Acura RL.
• Nissan is suspending all Japanese production operations until tomorrow and said will assess resumption of production after that date later this week. The tsunami reportedly damaged more than 2,000 Nissan and Infiniti-brand vehicles earmarked for Japan and U.S. showrooms. Most were reported to be Infiniti M, EX and FX models at a port to be shipped to North America when the giant wave swept over the area.
• Mazda Motor Corp. announced Tuesday morning that it will extend the production suspension at its Hiroshima and Hofu plants until March 20. Previously, operations were scheduled to be suspended from the night shift on March 14 through to the night shift on March 16. Mazda said it will announce any further production changes for March 21 onward as soon as a decision is made. “We are expecting shortages of certain parts, such as steel plates and brake parts, to name a few,” Mazda spokesman Kotaro Minagawa told the trade journal Automotive News. The company’s shutdown will affect production of every model it sells in the U.S. except the Michigan-built Mazda6.
• Subaru plants will be shuttered at least until Thursday, said parent company Fuji Heavy Industries Ltd. The shut-down will impact production of U.S. models of the Impreza and the popular Forester crossover SUV.
• At Mitsubishi Motors Corp., a spokesman said the company could resume production Wednesday, but wasn’t sure its parts supply would hold out for more than a day or so. In a statement, the company cautioned that it is still assessing production plans for Thursday and later.
• Suzuki Motors closed all of its plants in Japan until Thursday, March 17, after which the company said it will assess the situation. The closures affect the Takatsuka plant, which assembles motorcycle engines; the Kosai passenger car assembly plant; the Iwata multi-purpose vehicle and commercial vehicle assembly plant; the Toyokawa motorcycle and outboard motor assembly plant; the Sagara passenger car and engine assembly plant and the Osuka plant foundry, the company said.
Suppliers The Key
While most automaker assembly plants escaped serious damage, less detail is known about the state of Japan’s vast and fragmented supplier base. It is the disaster’s effect on those operations – and the connected logistics – that ultimately will dictate when automaker production resumes normalized activity. Shipping activity has also been affected, with a numbers of major ports offline.
Honda, for example, said on Monday it had not been able to make contact with 44 of its has 113 suppliers in the disaster-torn region. And there were reports of proable production stoppages at throughout the sector’s manufacturing base, including key supplier sites for Toyota's powertrain-making operations. And there was continuing worry about the reliability of crucial electronic component supply from microchip and semiconductor operations, said IHS Global Insight.
“These types of critical components have wide-ranging effects on Japanese production,” the firm said, adding, “the process of rebuilding the supply capability of these types of facilities is not a matter of days or a couple of weeks, but will be evaluated on a case-by-case basis.”
U.S. Inventories Mostly Sufficient For Now
If the bulk of Japan’s auto production resumes as assumed sometime this week, the U.S. market appears sufficiently stocked to weather a temporary disruption of imported models, according to data from Edmunds.com.
Using Edmunds.com’s Days To Turn (DTT) metric that measures the time required for a dealer to retail a vehicle once it reaches the dealership lot, DTT ranged from a low of 7 days for the new Nissan Leaf electric vehicle, 26 days for the Subaru Forester and 35 days for the Toyota 4Runner to DTT figures well in excess of 100 for models such as the Toyota Yaris, Mazda MX-5 Miata and Acura ZDX.
Nissan, for one, noted in a statement that nearly 70 percent of its vehicles sold in the Americas region are locally produced in the region and manufacturing operations are unaffected. “In general, Nissan Americas is operating with a sufficient days’ supply of vehicle stock on the ground in the region or already in transit from Japanese ports,” a spokesman said today. He did note that “some Infiniti models and Nissan GTR and 370Z may experience delays in shipment to the U.S., with full impact still being assessed.”
And those wondering about the disaster’s impact on the already stunted supply of Japan-assembled Leaf electric vehicles, Nissan said a shipment “of more than 600” Leaf’s destined for the U.S. left port in Japan just one day prior to the earthquake, adding, “future impact, if any, on Nissan Leaf supply continues to be assessed.”
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