As car makers continue assessing damage following the earthquake and tsunami that devastated certain coastal regions of Japan, it is becoming clear that disruption of the Japanese auto industry will be deeper and longer-lasting than initially thought.
Several car makers including Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. shut down production and don’ t plan to restart until the coming week. But while damage reported at many major auto-company factories was minimal, it was worse for some suppliers. Transportation networks needed to move parts and vehicles also took a hit from which recovery may be difficult.
Car makers are likely to keep assembly plants closed until they are certain the supply chain has recovered enough to meet the demands of regular production, and that could take awhile.
The quake and tsunami disrupted many elements critical to the production and distribution of automobiles from labor to electrical power, fuel supplies, rail and highway transportation, and shipping ports where cars are marshaled for export.
Japanese car makers in general and Toyota in particular have long been known for running tight operations based on just-in-time inventory systems under which components and sub-assemblies arrive at the main factory shortly before they are assembles into vehicles.
A Toyota spokesman says this system has compelled many suppliers to set up shop near the big plants, especially larger so-called tier1 suppliers. However, suppliers come in many sizes and lower-tier companies located in more heavily damaged areas may take many days or weeks to regain their full capacity.
The affect for consumers in the U.S. and other markets export markets could range from a ripple to a shock in the supply of certain Japanese vehicles. Many Japanese cars that are popular in the U.S. are built here, including the Honda Accord and Toyota Camry. But others like the Toyota Yaris, Toyota’s Scion lineup, and the Honda Fit subcompact and Insight hybrid are made in Japan and could be in short supply this spring and summer.
If a severe shortage of such cars with high fuel economy occurs as fuel prices soar beyond $4 a gallon, as many analysts expect, Japanese carmakers could miss out on a significant opportunity to grab sales and market share. Meanwhile the disaster in Japan could be a boon for U.S. rivals like Ford Motor Co., and General Motors Co., which have been rolling out new fuel efficient models.
Then again, given the auto industry’s global nature, even U.S. car makers are likely to feel pain, depending on the degree to which they depend on Japanese suppliers.
Source : http://blogs.wsj.com/drivers-seat/2011/03/13/japan-earthquake-hobbles-car-makers/
