Almost three weeks after a hurricane and tsunami devastated Japan, much of the nation’s auto industry remains shut down and the resulting disruption in the critical global parts supply chain is beginning to impact automakers in the rest of the world.
Assembly plant shutdowns in Japan have led to losses in vehicle production of about 37,000 units per day since the earthquake, according to Scotiabank senior economist, Carlos Gomes. Cumulative losses approached 400,000 units through March 25th and continue to climb.
The shutdowns in Japan represent nearly 14 percent of global vehicle output, Gomes says. But the major risk to the global auto industry, including non-Japanese automakers, lies in the potential for auto parts shortages globally and its impact on the global supply chain, due to delays in the resumption of component deliveries by Japanese suppliers.
Japan is the world’s second-largest auto parts exporter, behind Germany, and hundreds of parts suppliers are located in northeastern Japan near the epicentre of the earthquake.
Assembly plants as far away as France and Belgium have already been shut down, because of parts shortages from Japanese suppliers, as have General Motors plant in Louisiana and New York, and closure is or will soon be imminent at several others. Production schedules in Germany have reportedly been affected s well.
Japanese auto plants in North America continue to operate on existing inventories although overtime has been curtailed at many to extend the days supply of critical components.
Producers of critical transmission gears, bearings and other parts are known to be located in the affected area.
Other key automotive components produced in the area include semiconductors, liquid crystal displays (LCD) and optical sensors, according to to the market research firm iSuppli.
iSuppli says: Chip suppliers are expected to encounter difficulties in obtaining and distributing raw materials and in shipping out products. This is likely to cause some disruption in automotive semiconductor supplies from Japan during the following weeks, if not months, particularly if suppliers rely on single-sourced solutions.”
OEMs around the world are said to be searching for alternate suppliers for critical components sourced in the affected region.
Beyond just that region, production of components and vehicles and their export from Japan are also hampered by the impact of power shortages and rolling blackouts, the availability of water and sewer services and the conditions at ports, railways, and roads.
According to the research firm SupplierBusiness, an IHS company, “With all these factors, supply levels probably won’t return to normal until mid to late summer.”
Toyota has announced that it will delay the roll-out of new variations of its Prius-family models, introduced at the Detroit and Geneva auto shows, at least I Japan. Production was originally scheduled to begin at the end of April.
The crisis is even affecting such things as the availability of paint colours, because of a shortage of supplies of a pigment called Xirallic made only at a factory near the damaged Fukujima Dai-ichi nuclear power plant in northeastern Japan.
According to the Detroit News, the disruption of the automotive supply chain resulting from the Japanese crisis could ultimately leading to lost production of close to 5-million vehicles worldwide.
