How the quake in Japan affects the auto industry
Automakers and auto suppliers face a disruption in production because the earthquake and tsunami that have crippled northern Japan.
Mon, Mar 14, 2011 at 01:18 PM
The crisis in Japan in the wake of the earthquake and subsequent tsunami continues. There have been multiple explosions at a nuclear power facility and the Tokyo Electric Power Company (TEPCO) has announced rolling power outages across the country to help meter demand.
On Friday, Nissan issued a release stating that production would be temporarily shutdown at its Japanese facilities but expected everything to be up and running within a few days. However, this was prior to the electricity concerns. The rolling power outages will further affect Nissan operations across Japan.
According to a Monday morning release from Nissan, The Oppama Plant, Kyushu Plant, Nissan Shatai and Yokohama Plant will suspend operations until Wednesday, March 16. The Tochigi Plant and Iwaki Plant will suspend operations until Friday, March 18. Additionally, Nissan will suspend air-conditioning at both its global headquarters and the Nissan Technical Center. All Nissan Gallery locations in the country will be closed until Friday, March 18 and all dealership signboard lamps will be blackened to reduce power use.
Toyota Motor Corporation (TMC) was able to restart production at its company-owned plants on 3/11 but made the decision to suspend operations today so that its employees can focus on their families. In addition to the closure of its main plants, several subsidiary plants are in shutdown mode until further assessments can be completed.
The following Toyota subsidiary plants are non-operational at the moment due to possible damage caused by the quake: Toyota Motor Hokkaido Plant, Toyota Motor Tohoku Plant, Central Motor Corporation Miyagi Plant (produces the Toyota Yaris) and the Kanto Auto Works Iwate Plant (produces the Scion xB and xD models). Toyota has revealed that employees from these facilities have been safely evacuated.
Honda has also confirmed damage to its plants, with one plant experiencing enough damage to actually injure employees and cause one fatality. A 43 year-old male at the Honda Tochigi R&D Center died when a cafeteria wall collapsed on him during the earthquake. Elsewhere in the facility, collapsing ceilings and other falling debris led to more than 30 injured associates. Several Honda plants throughout the country are closed including the Suzuka factory, which manufactures the Honda Civic Hybrid, Honda Insight and Honda CR-Z hybrids.
While the major automakers are facing plant shutdowns because of damage and rolling blackouts, auto suppliers across the country are in the same boat. According to an article in The Wall Street Journal, “Japan's auto makers all but shut down production, closing plants that supply not only cars for domestic sale, but also engines and other parts needed by assembly plants around the world. For some models, such as Toyota Motor Corp.'s Prius hybrid, Japan is the only source.”
In 2008 when gas prices spiked, demand for the Toyota Prius shot through the roof and consumers in some parts of the United States faced a months-long wait to buy a new Prius. As gas prices begin to rise again, it is likely that automakers will once again see a surge in demand for hybrids and fuel-efficient vehicles.
Although Japanese automakers aren’t the only ones that can pump out top-quality, highly fuel-efficient vehicles, the hybrid models produced in Japan are definitely popular among American consumers. The delay in production may have an affect on supply here in the United States, but everyone’s primary concern is obviously for the safety of Japanese citizens and helping Japan recover from this catastrophe.