Renesas is the single-largest supplier of automotive micro-controllers in the world.
In a matter of minutes, the earthquake and tsunami that struck Japan’s northeast coast, last March, took tens of thousands of lives and created hundreds of billions of dollars in devastation. Few industries felt the impact more directly than the automotive world – parts shortages still plaguing many of the industry’s major manufacturers.
While the March 11 disaster had a wide-ranging impact, causing shortages of a variety of parts, including plastic and rubber goods, perhaps the biggest problem was a shortage of electronic components. Among the manufacturers hardest hit by the quake was Renesas Electronics, the world’s largest supplier of micro-controllers.
Renesas provides 40% of the chips used by the automotive industry, and without those silicon circuits carmakers like Toyota and Honda saw many of their assembly lines come to a screeching halt.
Bringing its operations – which center around multi-billion-dollar “clean room” facilities in the region hardest hit by the March disaster – hasn’t been easy, but in recent weeks Renesas has been ramping operations back up and plans to be back to full capacity next month, TheDetroitBureau.com learned during a discussion with senior executives from the chipmaker.
“Despite the enormity of the destruction, Renesas has been able to restore capacity way ahead of schedule,” said Dan Mahoney, CEO of the firm’s U.S. subsidiary, Renesas Electronics America. Early on, the company had expected to take at least three months longer even with “the most aggressive recovery plan.”
Mahoney admitted the company had never planned for an earthquake of a 9.0 magnitude. It was so severe that even some of the largest machinery Renesas operated was ripped from the floor at its flagship Naka facility and flipped upside down. The good news was that the buildings remained structurally sound.
“That was the key break we got,” he explained, “We could start right away with the inside repairs.”
The Naka plant is one of the most advanced computer chip facilities in the world, producing a variety of silicon wafers in sizes up to 12 inches and with some of the highest circuit densities in the industry. That technology isn’t cheap, nor is it easy to repair. It also requires the sort of clean room standards that even the best hospitals couldn’t reproduce. So, that threatened to put a serious drag on the repair efforts.
By the time the effort got fully underway it wasn’t unusual to have as many as 2,500 people working in the factory at any one time. (Normally, the Naka plant employed “several 100,” said Mahoney.) And that didn’t include all the support teams helping prepare new production equipment and working outside the plant – ultimately, as many as 80,000 people, the REA chief estimates, were involved in the frantic effort.
The Japanese call it, “Kizuna,” which means to work together, and indeed, a number of key customers lent their support, said Mahoney, but, “Some of the help we got (also) came from our competitors.”
That wasn’t entirely altruistic, he quickly adds. It’s not unusual to find electronic components from a variety of manufacturers in the typical car. So, as long as Renesas was out of operation those competitors were also losing business.
As it ramps up production again, Renesas officials insist they have become a stronger and more flexible company. Overall production capacity will be as much as 10% greater than before. They will also have the ability to shift production of critical components among key facilities in the event of another emergency, according to Mahoney.
“There is a significant increase in the redundancy of our fabricating network,” said the executive, though he insisted Renesas has not received pressure to move capacity out of Japan.
A number of other automotive suppliers have been considering just such a move out of the earthquake-prone country.
“We have developed a back-u plan for everything we produce, but we are not exiting Japan,” said Mahoney.