The full consequences of the Japanese earthquake and tsunami that hit the country just under a fortnight ago are becoming clear as manufacturers and suppliers there extend production shutdowns while some plants overseas slow down output or even halt production. There is also now a sizeable backlog of freight at Japan's airports reported as exporters attempt to win back time lost following the factory shutdowns and move freight that would otherwise have been shipped by sea.
In Japan, carmakers are still having problems assessing the damage to certain tier suppliers that support both domestic production and output overseas. Domestic carmakers are expected to lose around 65% in light vehicle production by Friday, equal to 338,000 units. Toyota and Honda are facing extended closures over the coming weekend that will extend this total.
Movement around the north of the country continues to face problems but there are signs of improvement according to Brad Brennan, managing director of emergency freight provider Evolution Time Critical, who said that roads between Tokyo and the stricken areas are improving as Japanese officials focus on getting supplies to the affected areas. “Connections may be imminent,” he added.
The production of service parts at Toyota has begun again at seven of its plants though vehicle production at four plants closer to the epicentre of the earthquake remains out of action, including two that build vehicles for export to the US–the new plant in Miyagi Prefecture, which makes the Yaris and has a 120,000 unit-per-year capacity, and the Kanto Auto Works plant in Iwate that also makes the Yaris, as well as the Scion XB and Scion XD cars for export.
At its US operations, Toyota said it has not had to implement any plant stoppages as a consequence of the situation in Japan but it has cut scheduled overtime, including Saturday production.
“We still have parts in the pipeline between Japan and the US, so we eliminated overtime to conserve those parts as much as possible,” a spokesman told Automotive Logistics News.
Asked whether finished vehicle shortages were due in the US the company said that while inventories for US dealers remained in good shape generally the production shutdown in Japan “will have some effect”.
As for emergency logistics contingencies being put in place to minimise the impact on output and supply in the US, the spokesman said that the company is continuing to assess the supplier situation in Japan.
“It's a big job given that there are hundreds of suppliers and everyone is dealing with infrastructure issues,” he said “Until the suppliers' condition is known, it's difficult to predict what we may need to do.”
In terms of transit out of the country, Neal Williams, managing director of premium freight operator Priority Freight, said that the company was seeing an impact on supply of parts and availability of airfreight services from Japan.
“Supply of certain materials from Japan has reduced and is not meeting demand,” he told Automotive Logistics News. “There is now a sizeable backlog of freight at Japan's airports as exporters attempt to win back time lost due to factory shut down, but also for freight that would otherwise have been shipped by sea. Demand for airfreight is likely to increase in at least the short term which is likely to increase this backlog.
This is already registering on certain tier suppliers in Europe and Williams added that Priority Freight had seen an increase in high priority shipments that would otherwise have been transported by more regular services.
At Toyota Motor Europe, the company is temporarily cancelling overtime and weekend work as a precautionary measure because of this demand for parts.
“TME is currently studying the planning of delivery of parts for production plants in Europe, in order to determine if and when countermeasures must be considered in terms of production planning in Europe,” the company said on Monday. No decision has been taken yet.
In terms of finished vehicles, the company said transit time from Japan to Europe takes about five weeks by boat, which means the current production suspension has no immediate impact delivery.
“However, the prolonged production suspension in Japan might lead to delayed deliveries afterwards,” said the company but it added that it was premature to evaluate what delay might be applicable because it had first to decide on vehicle production restart timing and volumes.
Meanwhile, Nissan’s vehicle production in Japan is expected to start on Thursday while the company has already started limited operations at five plants making repair parts and parts for overseas production. A sixth plant that makes engines is expected to take longer to restart.
Nissan Americas says there has been no impact on production or vehicle output and the company has not had to set up any emergency logistics provision to meet sales.
The company says it has visibility of more than 1,500 Nissan Leaf vehicles either in transit from Japan or at port in the US. “This number includes the shipment of more than 600 Nissan Leafs which left port in Japan on March 10, the day before the earthquake,” said the company.
It added that rearward days’ of supply stands at the Nissan division stands at 47; Infiniti division rearward days’ supply stands at 49.
“These figures do not include vehicles in transit from Japan,” it said in a statement.
Honda is due to recommence some Japanese production today, but warned US dealers that it could not confirm when it would resume full production at certain plants before May and said it would have to delay filling orders placed by US dealers because of the shut downs.
Mazda and Suzuki are expected to resume production this week but with revisions in place going forward.
There has also been an impact on non-Japanese carmakers in the US with GM forced to suspend production at its Shreveport Assembly in Louisiana for the whole of this week due to a parts shortage resulting from the crisis in Japan. The plant makes the Chevrolet Colorado and GMC Canyon pickups.
“We will resume production at Shreveport as soon as possible, and at this point, we have sufficient vehicles to meet customer demand,” said the company in a statement. A GM spokesperson would not discuss the part affected or how it was planning to maximise flexibility and supply across the most critical operations for “competitive reasons”. Reports elsewhere point to a problem with transmission supply to Shreveport from Aisin Seiki.
The company simply said it would continue to follow the events in Japan closely to determine the business impact.
And the supplier impact is also being felt further afield. GM halted production in Zaragoza, Spain on Monday and has cancelled shifts this week in Eisenach, Germany because of parts shortages.
The effects are also having an impact in South Korea with GM Daewoo and Renault Samsung trimming back production. A shortage of engine and gearbox parts produced in Japan is said to be behind the cutback in sedan production at Renault Samsung’s Busan plant with production losses estimated to hit 2,000-2,500 units this month.
(Picture courtesy of Press Association)