Honda's Mendel: Parts shortages could hamper U.S. plants for 3 months
Photo credit: HONDA
WASHINGTON – Honda Motor Co.'s North American plants could be operating at sharply reduced output for the next three months as the auto industry struggles to rebuild supply lines following the earthquake in Japan, the automaker's top U.S. sales executive warned.
John Mendel, American Honda Motor Co. executive vice president, said today he foresees parts shortages having an impact on the automaker's North American plants for "60 to 90 days ... that's my working number for now."
In a best-case scenario, Mendel added, the production cutbacks could be as short as 30 days.
Last week, Honda reduced production at five of its six North American plants by as much as half because of a shortage of parts from suppliers damaged in the March 11 earthquake in Japan.
About 90 percent of the vehicles Honda sells in the United States are assembled in North America, and 600 of its 710 main suppliers are based here.
But Mendel said that something as inconsequential as a missing speedometer needle can stop an assembly line.
"We can't drive up to these suppliers to ask what's going on because there's debris on the roads three meters deep," Mendel said in an interview here at the press launch of the 2012 Honda Civic.
"In some places, they are still recovering bodies. And even if you have a warehouse full of finished microchips, the roads are ruined, and you are in the radiation zone. What are you going to do?" he said.
Honda imports the CR-Z and Insight hybrids and the Fit subcompact from Japan.
Despite the extended downtime, Mendel noted that it would be "erroneous to think we can't make it up."
Honda's new plant in Indiana, for example, has been ramping up to build 100,000 units a year, but it has a capacity of 300,000 units.
Mendel said he doubted Honda "will be any more or less impacted" than any other automaker.
Honda Division ended March with a U.S. inventory of 209,000 units -- enough to last 47 days, down from a 64-day supply on March 1, according to the Automotive News Data Center.
Honda Division's U.S. sales rose 25 percent last month to 121,039 units, and the automaker is asking dealers to boost April sales by 12 percent.
"If the industry runs down on inventory in late May or June, we'll be in there, too," Mendel said. "The industry is too intertwined. Everybody has some part that comes from Japan."
While Honda is not following Toyota in restricting dealers from ordering certain replacement spare parts, it has set up its ordering system to detect whether a dealer is stockpiling a certain part in an effort to corner the market.
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