Toyota pares back production of models like Camry at North American plants but resumes some Japanese operations tomorrow.
With the lights on the landmark Tokyo Tower darkened due to power shortages across the country, things are anything but back to normal in Japan, but one sign of progress comes from Toyota, which says it will reopen some of its parts plants on Thursday, though the maker will keep assembly lines shuttered until at least the 22nd.
The plants resuming operation tomorrow will supply much-needed parts to vehicles in use in Japan. Meanwhile, Toyota said, it will resume production, next Monday, of parts needed by its overseas plants.
That’s good news for managers of assembly operations in North America, where the maker late yesterday announced it would trim overtime and Saturday hours because of the threat of possible parts shortages. Like many so-called “transplants,” Toyota’s U.S. and Canadian assembly lines remain dependent upon many parts and components shipped in from Japan.
“It didn’t make any sense to build vehicles on overtime if we were not sure we would have enough parts,” explained spokesman Javier Moreno. How long the slowdown will continue remains uncertain. “We’re not sure how many parts they can send us,” said Moreno.
Toyota isn’t the only maker worried about the impact on foreign operations. Subaru has halted production at its Indiana plant. And even Detroit makers are worried about parts shortages triggered by problems with Japanese suppliers.
Chris Perry, General Motors vice president of marketing, told reporters in Detroit it is possible GM’s production in the U.S. could be hurt. “It’s going to have an effect on all manufacturers,” said Perry adding the impact could extend to GM’s operations in China.
The financial impact of the Japanese shutdowns is rapidly mounting.
Toyota previously indicated the shutdown of its Japanese operations could cost the maker as much as $80 million a day in lost profits. Part of the problem is that the industry giant has remained more dependent on home market production than rivals like Nissan and Honda. Roughly 45% of its worldwide vehicle production comes out of Japan.
And while U.S. plants produce 70% of the Toyota-badged vehicles sold in North America, Japanese plants are still responsible for Prius, Lexus and Scion models.
But the entire Japanese industry has so far felt the impact of the quake, noted analyst Efraim Levy, of Standard & Poors, pointing to a variety of problems that must be overcome before makers can resume production. “Some plants are affected by parts supplier issues, employee considerations and/or damage to export ports,” he said.
Mitsubishi Motors Corp. restarted three plants located outside the quake region for the first time since the magnitude-9.0 quake and tsunami struck last Friday, and tiremaker Bridgestone Corp. also began the process of ramping up some production at three plants.
And other companies are expected to begin the process of resuming operations on a step-by-step basis over the coming days. “We’re watching hour-by-hour, part-by-part,” said a senior Japanese industry executive asking not to be identified.
Nissan is expecting to reopen one assembly plant tomorrow, another on the 18th, but the fate of four other lines is uncertain. Honda, Mazda and Subaru parent Fuji Heavy Industries expect to remain closed through at least the 20th, Suzuki until the 21st.
Nissan and Honda are estimated to be losing about $20 million daily, according to Koji Endo, auto analyst with Advanced Research Japan.
Japan’s government is eager to get the auto industry restarted but the entire country faces a myriad of problems, not the least of which is a shortage of power resulting from the loss of the Fukushima nuclear plant – which is also leaking radiation.
Between 350,000 and 400,000 Japanese are homeless, an estimated 5 million homes and businesses and roughly one third of the country electric power supply may have been put out of commission by the quake, according to some estimates.
Paul A. Eisenstein contributed to this report.