Japan Shutdowns Likely To Squeeze Everyone


Friday marked one week since the earthquake and tsunami that pounded Japan. Manufacturers of autos and parts there have either vastly reduced output or are shuttered for the next few days and possibly longer, depending on the fate of the Fukushima nuclear plant and Japan's power grid. But even U.S. domestic companies are feeling the pinch now and will feel it worsen if the shutdowns continue.

GM has suspended production at its Shreveport assembly plant in Louisiana for the week of March 21 due to a parts shortage. "We will resume production at Shreveport as soon as possible, and at this point, we have sufficient vehicles to meet customer demand," said the company in a statement, which adds that GM's other North America plants are running normally.

Ford says supplies are normal. "We don't have any production impacts at this point," says a spokesperson.



A Detroit-based market observer says that is unlikely. "Some of the automakers are starting to realize now what components they are going to run out of," he says. "And that they will exhaust their supply of products like batteries or wiring. We are only starting to see the beginning of this."

Jeff Schuster, head of industry analysis at J.D. Power & Associates, says everything depends on how long rolling power outages in Japan, problems at the reactor and infrastructure, and fuel supply shortages go on there. "It clearly goes beyond hybrids and electrics, though those vehicle segments will be impacted most because of the high level of electronic componentry," he says. "But really, that is going to be the case with all vehicles being produced today; these are highly specialized, sophisticated products with a lot of electronics, and a lot of that is coming out of Japan. So this could be widespread and substantial."

Schuster says that some parts producers have restarted this week and that vehicle assembly should be restarted in the middle of next week -- "should" being the operative word. "If that's the case, we will continue to see isolated cases of shutdowns as we are seeing with GM in Shreveport, and inventory shortages -- particularly with vehicles like Nissan Leaf and Toyota Prius, which are in short supply already."

Meanwhile, Toyota says operations at its 13 North American vehicle and engine plants are running normally, "although overtime has been curtailed for now to assure we maintain adequate inventories of parts that come from Japan," said Toyota in a corporate statement. The company points out that since most parts and materials for Toyota's North American-built vehicles are from North American suppliers, "this helps insulate Toyota's North American plants from production interruptions in Japan."

The Torrance, Calif.-based U.S. arm of Toyota says the company makes 12 models in North America, including the Camry, Corolla, RAV4, and Lexus RX 350. And Toyota says nearly 70% of all Toyota and Lexus vehicles sold in the U.S. are made in North America. Prius vehicles, however, are built in Japan. "But, for now, inventory levels of the Prius at U.S. dealerships are generally still adequate," says the company.

Honda says it sees no impact on its operations in North America, as more than 80% of Honda and Acura products sold in the U.S. are produced in North America, and most parts for Honda automobiles manufactured here are sourced here. The company says it has about 600 North American parts suppliers for its five U.S plants that make vehicles like Accord, Accord Coupe, Acura TL, Acura RDX, Civic, Pilot, Odyssey and Ridgeline.

"We currently have adequate inventory of products supplied from Japan, both in inventory and in transit from Japan," the company says. But like Toyota, Honda's hybrids and the subcompact Fit are made in Japan.

Nissan says its eponymous division has 47 days' supply, while Infiniti's supply stands at 49, although those figures don't include vehicles in transit to the U.S. from Japan. The company says 1,500 Nissan Leaf electric vehicles are either in transit from Japan or at port in the U.S. -- a number that includes the shipment of more than 600 Nissan Leafs that left port in Japan on March 10, the day before the earthquake. Nissan says it has also begun monitoring vehicles made in Japan for any traces of radioactive material.

As far as humanitarian efforts from major U.S. and Japanese automakers:

  • General Motors gave $250,000 to the Red Cross earlier this year for disaster relief and on March 14 said it would give $500,000 to the Red Cross for Japan.
  • The Chrysler Foundation, the philanthropic arm of Chrysler Group LLC, said on Friday it would donate $100,000 to the American Red Cross for Japan disaster relief efforts. The Foundation said it will also match employee and dealer Red Cross contributions up to an additional $100,000.
  • The Ford Motor Company Fund is matching employee contributions for American Red Cross relief efforts up to 50,000. "We have a Red Cross microlink available to employees on our internal Ford website, as well," said a spokesperson.
  • Toyota Motor Corporation in Japan donated ¥300 million (approximately $3.7 million) to support relief efforts.
  • Honda in Japan donated ¥300 million (approximately $3.7 million) toward the relief and recovery effort, as well as a total of 1,000 gasoline generators, and 5,000 gas canisters. Honda is also sending staff to explain how to use the equipment. Honda's U.S. operations will run a dollar-for-dollar matching gift program for its 29,000 employees benefiting the Red Cross. The company says it has also established a Web site for automotive, motorcycle and power equipment dealers to contribute.

  • Nissan Americas has pledged $1 million to the American Red Cross, and the company says its global contributions will reach more than $3.75 million (¥400 million) in cash and in-kind contributions for earthquake relief efforts. The company is also providing 50 vehicles to support aid agencies in affected areas of Japan.
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