Japan automakers brace for looming electricity shortfalls
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TOKYO -- Japanese carmakers, even if they have the parts to resume production, may soon face a new challenge of not having enough electricity to operate their factories.
With several electric power plants knocked out by Japan's devastating March 11 earthquake, there is a growing gap between the amount of power produced and the amount Japan's industrial base needs.
Automakers are now grappling with how to manage the shortfall -- one expected to worsen as more factories come online after the quake, and as air conditioning needs rise with the approach of summer.
A key issue is whether there is enough power to simultaneously support two of Japan's most important industries: automaking and electronics.
Industry groups are considering several remedies:
• Rotating production holidays between the automotive and electronics industries.
• Reducing overall use of electricity in exchange for a minimal but steady supply.
• Alternating production downtime between individual automakers.
The first two options are more likely, says an official at the Japan Automobile Manufacturers Association, or JAMA, the industry group coordinating the automakers' response.
Summer shortfall
Suppliers and labor unions have objected to the third option because it would entail parts makers working round the clock to supply a stream of alternating automakers – who would themselves get downtime while rival assemblers are producing, the JAMA official said.
Japan's automakers are struggling to restart vehicle assembly following the March 11 earthquake. So far, they have been fighting to restore broken supply chains and get the components they need to build cars. Parts shortages have forced the suspension of most car output.
In related news, Toyota said today it will halt production of hybrid vehicles in Japan for one day on March 30 to confirm it has an adequate supply of parts.
The automaker will resume production at its Tsutsumi plant in Toyota City, Aichi Prefecture and the Miyata plant in Miyakawa, Fukuoka Prefecture, on March 31, spokesman Paul Nolasco said today by telephone.
As plants come back online, rationing the supply of electricity will pose a new hurdle. The goal is to avoid the short, sporadic blackouts currently being used to conserve energy.
Tokyo Electric Power Co., the company supplying electricity to Tokyo and much of eastern Japan, said last week it expects a power output shortfall of 8.5 million kilowatts this summer -- or about 15 percent less than peak demand. But the Ministry of Economy, Trade and Industry has estimated that the summer shortfall could reach 25 percent, Japan's Nikkei business daily says.
The 9.0-magnitude earthquake hammered power plants across eastern Japan, leaving many still offline, including the Fukushima Daiichi nuclear plant that is leaking radiation. Tokyo Electric implemented rolling blackouts after the disaster to offset the gap between supply and demand.
But the outages are a bane to manufacturers trying to reboot their operations for several reasons. Their schedule is often unclear and unpredictable. And the shutdowns are intrusive.
Inefficient blackouts
Even though the daily power outages are for only three hours, the actual impact on a factory can be double that time span. That is because manufacturers need to prepare their machinery for the shutdowns; it could be damaged if the plug were simply just pulled.
And starting up takes time too -- to calibrate or otherwise warm up machines.
"A three hour blackout can turn into a seven hour one. It's inefficient," the JAMA official said. "What we'd prefer is a guarantee of steady power if we reduce overall electricity consumption."
Forging and die-casting operations, which require long lead times to heat and cool materials, are especially vulnerable to sudden blackouts, the official said.
But voluntarily powering down might not appeal to all automakers, including Mazda Motor Corp., with operations in western Japan that were not damaged by the earthquake.
A Mazda official said the company is studying the plan. But he points out that even if Mazda cuts back on its energy use, there is no effective way to transfer that electricity from the grid in western Japan to the grid in quake-devastated eastern Japan.
That is because western Japan uses 60 megahertz power, while eastern uses 50 megahertz.
"It's kind of a pointless gesture," the official said. "We need to stay in operation as a driver of the economic recovery."
Bloomberg contributed to this report.
You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on 
