Toyota now expects to have production of all 12 models built in North America back up to normal by September.
Working with suppliers – and finding alternative sources, where necessary – Toyota today said it expects to have its North American vehicle production back to normal by September, notably earlier than it originally feared following the disastrous Japanese earthquake and tsunami of March 11.
The entire Japanese auto industry has been feeling the pinch of parts shortages resulting from the March disaster, which struck Japan’s northeast coast, killing tens of thousands and damaging or destroying 100s of automotive parts facilities.
Like most of the Japanese competitors, Toyota’s home market plants were shuttered for the better part of a month and its entire global factory network has been operating well below capacity since then. Toyota was particularly vulnerable, however, because it produces significantly more vehicles in Japan than key rivals Nissan and Honda.
The situation was compounded by shortages of a variety of materials, notably including rubber, resign and electronic components. But Toyota has been working with suppliers to help get them back up and running as quickly as possible – or find alternative sources.
A critical breakthrough came when Renesas, one of the world’s largest suppliers of automotive microprocessors, began production again. The supplier also expects to have its operations back to normal by September.
Toyota’s U.S. plants were shuttered for a week following the recent Memorial Day holiday. Since then, production of eight of the 12 models built in North America has reached 100% of normal capacity. The remaining four models will be back up to speed by September, according to Steve St. Angelo, executive vice president of Toyota Motor Engineering & Manufacturing, North America.
“After September we will focus on making-up lost production as much as possible,” said St. Angelo, who also serves as North American safety czar for the maker. “Our team members and suppliers here and in Japan have worked tirelessly to get us back to 100 percent, overcoming many challenges. The effort in Japan has been incredible, especially in the midst of such tragedy and devastation.”
The quake has shaken up the global expansion plans announced by Toyota CEO Akio Toyoda just days before the disaster.
The maker saw its profits for the first three months of 2011 plunge 77%, dipping to $314 million, the lowest level in nearly two years. That decline, however, also reflected the impact of the current, lopsided dollar-yen exchange rate. The impact, meanwhile, will continue to be felt for the rest of the fiscal year, which runs through March 31, 2012, warned CEO Toyoda. Profits for the year are expected to decline 35%, to $3.7 billion.
But Toyota officials are nonetheless hoping to reduce the damage by rapidly ramping production up during the second half of the fiscal year.
“We will enter a phase of production make-up and recovery and will make up for lost production to the tune of 350,000 units,” said Senior Managing Director Takahiko Ijichi, during a conference call earlier this month, “so the overall unit production decrease (compared to original, pre-quale plans) would be 450,000 units” for the full fiscal year.
Other key Japanese makers also are pushing to get production back to normal faster than originally feared, but the losses will still be significant, Honda, for example, acknowledging output of the critical 2012 Civic won’t be back to capacity until “sometime in the fall.”