Subaru halts U.S. prouction of the Outback.
The impact of the Japanese earthquake and tsunami has now reached the U.S., two automakers announcing plans to cut back on production due to potential shortages of imported components.
Other Japanese makers are still assessing the situation, as are Detroit’s Big Three, all of which import parts and components from Japan.
“We’re watching hour-by-hour, part-by-part,” said a senior industry executive asking not to be identified by name.
Subaru of America says it is suspending indefinitely production at its assembly plant in Lafayette, Indiana. The factory produces the maker’s Outback, Tribeca and Legacy sedan models. There are 3,500 U.S. workers at the factory, which last year produced 150,000 vehicles.
The shutdown could disrupt Subaru’s steady growth in the American market. The maker last year posted an all-time sales record of 263,820 vehicles, a 16% increase.
Toyota continues U.S. production but halts overtime as it "assesses" the potential for parts shortages.
The Subaru plant, known as SIA, will actually continue rolling, as it will maintain production of the Toyota Camry, which the smaller maker recently added to help better make use of factory capacity.
Toyota itself, meanwhile, has suspended overtime, along with Saturday production plans, at all of its North American plants – 14, in all, including assembly lines as well as component operations. The move comes as the maker seeks to assess the impact of the natural disaster that devastated Japan last Friday.
Like the rest of the industry, Toyota has temporary halted all production at its home Japanese plants. The question is whether the flow of parts from Japan to the U.S. have been disrupted. In the meantime, the giant maker wants to conserve supplies as long as possible.
Japanese makers are strict adherents of Just-in-Time inventory management, meaning they maintain minimal supplies of parts and components. That’s relatively easy to manage when a company’s suppliers are generally located on the same continent, but the Japanese natural disaster underscores the challenges of operating a JIT system when key components are sourced from abroad.
“Given the fact that there is a temporary halt in Japan production,” said Toyota spokesman Javier Moreno, “we’re making sure we continue to get the parts we need.”
Nissan, meanwhile, plans to maintain operations at its North American plants, according to communications chief Dave Reuter. But, he quickly adds, “We are assessing the supply chain on a daily basis.”
That position was echoed by Honda spokesman Jeff Smith, who stressed, “This is still a very fluid situation.”
Japanese automakers aren’t the only ones concerned by the crisis in Japan, which has effectively shut down the home auto industry. Deutsche Bank Analyst Rod Lache today reported that Japanese suppliers produce 22% of global automotive semiconductors, critical elements in today’s high-tech automobile. A shortage of just one key circuit or component could conceivably bring production of some vehicles to a crashing halt.
(Click Here for more on that story.)
So far, however, there are no reports of shortages at domestic Big Three plants, but as with their Asian rivals, officials in Detroit suggest they are continuing to “assess the situation.