North American automakers are facing the possibility of parts shortages from the devastation in Japan.
While Japanese-owned assembly plants in the United States, Canada and Mexico went about their normal production schedules today, assessment teams on both sides of the Pacific were evaluating the damage to global supply lines.
Suspecting that parts shortages will soon become a reality, some automakers immediately trimmed overtime production to conserve parts.
Toyota Motor Corp.’s North American plants suspended overtime production for that reason.
Mike Goss, spokesman for Toyota’s North American manufacturing and engineering operations, said the company imports about 20 percent of its components from Japan. He said the company was confident about the working condition of its Tier 1 supply base, but personnel were assessing the situation among Tier 2 and Tier 3 suppliers in Japan.
Subaru’s parent, Fuji Heavy Industries Ltd., said today that about 30 of its suppliers had sustained damage from the 8.9-magnitude earthquake and tsunami in northern Japan.
Fuji, which builds the Subaru Legacy, Outback and Tribeca in Lafayette, Ind., relies on Japanese plants for all its transmissions and six-cylinder engines.
“We just don’t know yet what impact we will see,” said Tom Easterday, executive vice president of Subaru of Indiana Automotive Inc. “Right now, it’s production as usual. But it takes about a week for the parts flow to reach us from Japan. So it will be next week before we see any effect.”
Machinery issues
Easterday said that the damage had been deemed “minor.” But he noted that minor damage could include impairment to a supplier’s machinery, which could require a long period to recalibrate them for precise part making.
A report issued today by IHS Global Insight analyst Paul Newton said: “Several of the affected component plants supply automakers’ facilities around the world with systems and components that may not easily be shifted to other manufacturing locations.
“The ripple effect of the stoppages to supply and production in Japan will be felt in many parts of the world, including the United States, China, and Europe, as many key parts and technology are exported to global operations from Japan.”
Newton continued: “Reports of possible stoppages at Toyota’s automatic transmission facility in Hokkaido and specialized forgings in Tohoku, one of Panasonic’s key battery pack facilities, and several reports of compromised electronic component supply -- chips, semiconductors, etc. -- are extremely worrying.
“The process of rebuilding the supply capability of these types of facilities is not a matter of days or a couple of weeks but will be evaluated on a case-by-case basis.”
Another cause for concern is the damaged nuclear power plant in Fukushima, Japan, which has been sidelined by a potentially catastrophic meltdown.
That problem is not unique to the global auto industry. But it leaves a gaping hole in the power grid that serves Japan’s heavily concentrated population. As good corporate citizens, Japan’s automakers have stopped auto production at several plants to conserve the region’s power.
The lengthy process of rebuilding or replacing the nuclear reactor could complicate industrial output for months.
Vehicle shipments delayed?
The resulting auto plant shutdowns will already interfere with some vehicle deliveries to North American retailers. Nissan North America said today shipments of the all-electric Leaf, and GT-R and 370Z models could be delayed.
Some Lexus and Infiniti shipments also could be interrupted because of plant closings in Japan.
With rising gasoline prices prompting a shift to hybrids, Toyota’s U.S. dealers are concerned about supplies of the Toyota Prius, which is built in Japan. The plant that assembles the Prius is operating, but parts delays and transportation bottlenecks could stall overseas shipments.
Honda Motor Co. builds 80 percent of the vehicles it sells in America in U.S. and Canadian plants. The automaker also relies on U.S. production for engine castings and other small subassemblies, diminishing the quake’s impact on parts supplies on its North American output.
But American Honda Motor Co. does rely on Japanese factories for its most fuel-efficient models -- the Fit, the Insight, Civic Hybrid and CR-Z. Those vehicles will be critical for Honda dealers should fuel prices continue rising in the United States.
Detroit impacts
Detroit’s automakers also rely on Japanese suppliers for some critical parts.
Ford Motor Co. said today it is monitoring supplies with its Tier 1 suppliers in Japan, which are in turn assessing the Tier 2 supply base. Ford is particularly concerned about hybrid battery supplies.
Sanyo builds and supplies Ford with hybrid vehicle batteries assembled in Japan.
“We have not had any supply disruptions at this point,” Ford spokesman Todd Nissen said today. “But like the rest of the supply base, Sanyo is continuing to assess the situation.”
General Motors and Chrysler Group said they had not lost production because of the earthquake and tsunami but are monitoring the situation with suppliers.
