Japan crisis could squeeze world auto production

Thousands of cars washed away; fears raised about supply chain

03/16/2011


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 2015 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...
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
Strategic outsourcing delivers efficiency; Sleeve bearing clearance; Causes of water hammer; Improve air quality; Maintenance safety; GAMS preview
World-class maintenance: The three keys to success - Deploy people, process and technology; 2016 Lubrication Guide; Why hydraulic systems get hot
Flexible offshore fire protection; Big Data's impact on operations; Bridging the skills gap; Identifying security risks
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Getting to the bottom of subsea repairs: Older pipelines need more attention, and operators need a repair strategy; OTC preview; Offshore production difficult - and crucial
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

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.
This article collection contains several articles on the vital role that compressed air plays in manufacturing plants.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me