By Jim Taylor, Editor MACS ACtion Magazine
In the expanding wake of the disasters in northeastern Japan, several major players in theJapanese auto industry announced their plans to completely shut down production at some facilities for a period immediately after the events. At this writing, some have restarted while others remain either closed or on limited hours. The situation remains very fluid, and what’s true now might change again tomorrow.
Immediately after the quake, Honda, Toyota, Nissan, Mazda and Mitsubishi all suspended domestic production while the companies took stock of the safety of employees, their physical plants, continuity of utilities, available transportation, and supplier capabilities. As aftershocks continue, roads crumble anew and rails spread even after prior inspection.
Although much of the country suffered little or no damage, the devastated area is home to many small supplier businesses as well as some assembly plants. Honda alone cited over 100 suppliers in the northeast section of the country. The huge human toll of the disaster and the initial recovery efforts will hamper these small and mid-size businesses for a long time.
Additionally, business operations will almost certainly be hampered by the limited electrical supply and rolling blackouts necessitated by several generating stations being knocked off-line.
Pundits and industry observers differ on the ripple effects of shutting down part of the nation’s auto manufacturing for any length of time. The OEMs see the interruption as a necessary but minor blip, and are on record as saying international supply of vehicles and parts will not be affected very much. Outsiders are saying that such a cessation naturally must affect operations in other countries, either in the number of vehicles available for sale or in supply of parts for vehicle assembly.
One observer noted that the electronics industry will be particularly hard hit by the situation. Chip and circuit board manufacturing equipment must be scrupulously clean and precision aligned to make solid-state products used in everything from cell phones to satellites, and every industry that uses them – including ours – will be affected.
Another problem is the expanding radiation warning area and the population’s reaction. For example, although Tokyo is more than 150 miles from the center of events, much of the population has either left the city or is remaining indoors at home. Some plants and worksites that survived the natural events with no damage have been shuttered by worker absences.
The Japanese OEMs are still putting a brave face on it, saying there will only be a momentary interruption in international supplies, but some also slowed their non-Japanese assembly plants in an effort to conserve existing parts.
A week after the disaster, GM announced it was suspending operations at a truck plant in Louisiana due to parts shortages. A day after that, Opel shuttered a plant in Spain and Renault cut production at a Korean plant by 20%. Today, GM said it has cut 10 percent of the hours at its Korean (ex-Daewoo) plants due to parts availability.
Over the past weekend, unsubstantiated stories emerged about “panic buying” in other countries as buyers rushed to get their Prius or Fit or similar vehicle before the supply diminishes.
Its safe to say that the full effect of the disaster on our industry won’t be known for quite a while, and perhaps even long after the assembly plants re-open.
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