Japan crisis could squeeze world auto production

Thousands of cars washed away; fears raised about supply chain


While the immediate focus of Japan is on rescuing the wounded, recovering the dead and caring for survivors, the island nation is slowly coming to grips with the impact of last week’s natural disaster on its largest industry: automotive manufacturing.

The massive earthquake and the devastating tsunami that followed appear to have wrecked or washed out to sea thousands of new cars. The force of the natural disaster also crushed plants and left manufacturers large and small struggling to take stock of the damage.

Auto production is on hold at least temporarily, and it remains to be seen how long it will take to get production up and running again. The impact of the stoppage could be felt for months in Asia and around the world — by automakers, workers, investors and motorists, who could find some of their favorite vehicles in short supply.

Thousands of vehicles have been lost or damaged, including 1,300 Infiniti luxury cars swamped by the tsunami at a storage depot by the port of Hitachi. Nissan said at least another 1,000 vehicles were damaged at the port of Miyagi — one of the cities most badly damaged by the disaster.

Just days before the 8.9-magnitude quake, a plan to boost worldwide sales to 10 million and drive profits up sharply was announced. In the long run, industry analysts suggest the current setback may have little impact on the “Global Vision” announced by President Akio Toyoda, but that could depend on the depth of the damage to Toyota’s facilities and that of its suppliers.

Part of the problem is that each auto plant depends on a network of hundreds of parts manufacturers, and it is unclear how badly those subcontractors have been impacted by the disaster, said Jim Hall of automotive analysis company 2953 Analytics. But “some assembly plants could feel it pretty soon,” Hall said, and the impact will be felt beyond Japan.

About half of all the Japanese-branded vehicles sold in North America are built in North America. But many of those factories still rely on Japanese parts makers for everything from engines and transmissions to the smallest “widgets,” notes analyst Peterson. If there is no additional source available for such components, U.S. car plants like the Nissan facility in Canton, Miss., or the Honda factory in East Liberty, Ohio, could be in trouble, he said.

Japanese factories traditionally rely on a “just-in-time” manufacturing system — where inventory is delivered to the factory by suppliers only when needed for assembly — but there’s a relatively long supply chain from Japan, so Peterson said the impact on those “transplant” assembly plants might not be felt until early April.

The impact of the crisis will likely vary from model to model, analysts say. Early signs suggest Honda could be hit particularly hard. Its Sayama plant, located in one of the regions of Japan hit hardest by the disaster, is a key assembly center, producing models like the Honda CR-V, Accord and Fit, some of them for export to the United States, as well as Acura’s RL and the TSX model. In addition, Honda said the Ogawa Plant, in quake-damaged Saitama, produces automobile engines.

For U.S. consumers, the situation might, at least briefly, repeat some of the product shortages experienced two decades ago when Japanese automakers agreed to so-called “voluntary” restraints on exports to the United States. That led to a sharp run-up in the price of Japanese automobiles.

- Edited by Amanda McLeman, Plant Engineering, www.plantengineering.com

No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Sister act: Building on their father's legacy, a new generation moves Bales Metal Surface Solutions forward; Meet the 2015 Engineering Leaders Under 40
2015 Mid-Year Report: Manufacturing's newest tool: In a digital age, digits will play a key role in the plant of the future; Ethernet certification; Mitigate harmonics; World class maintenance
2015 Lubrication Guide: Green and gold in lubrication: Environmentally friendly fluids and sealing systems offer a new perspective
Drilling for Big Data: Managing the flow of information; Big data drilldown series: Challenge and opportunity; OT to IT: Creating a circle of improvement; Industry loses best workers, again
Pipeline vulnerabilities? Securing hydrocarbon transit; Predictive analytics hit the mainstream; Dirty pipelines decrease flow, production—pig your line; Ensuring pipeline physical and cyber security
Cyber security attack: The threat is real; Hacking O&G control systems: Understanding the cyber risk; The active cyber defense cycle
Designing positive-energy buildings; Ensuring power quality; Complying with NFPA 110; Minimizing arc flash hazards
Building high availability into industrial computers; Of key metrics and myth busting; The truth about five common VFD myths
New industrial buildings: Greener, cleaner, leaner; New building designs for industry; Take a new look at absorption cooling; Offshored jobs start to come back

Annual Salary Survey

After almost a decade of uncertainty, the confidence of plant floor managers is soaring. Even with a number of challenges and while implementing new technologies, there is a renewed sense of optimism among plant managers about their business and their future.

The respondents to the 2014 Plant Engineering Salary Survey come from throughout the U.S. and serve a variety of industries, but they are uniform in their optimism about manufacturing. This year’s survey found 79% consider manufacturing a secure career. That’s up from 75% in 2013 and significantly higher than the 63% figure when Plant Engineering first started asking that question a decade ago.

Read more: 2014 Salary Survey: Confidence rises amid the challenges

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.