After the March 11 monster earthquake and tsunami wiped out large parts of Japan, headlines focused on the near-meltdown of Fukushima. Recently, I learned that there was a strong likelihood of a worldwide economic meltdown, caused by a microchip factory 80 miles south of Fukushima. Here is the story of how the crisis was contained.
“I was already retired when the earthquake came,” remembers a Toyota official who requested that his name is not published. He is a seasoned production expert, one of the few alive who received personal training from Taiichi Ohno, the father of the Toyota production system. “I thought, let others handle the problem, but I was wrong.” He was recalled and asked to spearhead the Toyota part of the reconstruction effort.
When he received the call, Toyota’s Japanese production system itself was pretty much unharmed, however, there were 659 cases of suppliers in serious trouble. The most serious trouble was at a chipmaker named Renesas. Born from a merger of the semiconductor arms of NEC, Hitachi and Mitsubishi, Renesas supplied some 20 percent of the world’s automotive microcontroller market. About 70 percent of the production was sold to Japanese automakers, the remaining 30 percent went to US and European car companies. Two weeks after the catastrophe, it was estimated that Renesas’ Naka plant, would not be operational until July.
That estimate was overly optimistic, I hear now.
“On April 1, we were told that basic repairs would take two and a half months,” the unnamed official remembers. “Start of mass production was scheduled for September. Which meant that first product to customer would have been shipped in January.“
While the eyes of the world were on the smoldering ruins of Fukushima, the damaged chip plant was about to trigger a worldwide disaster. Renesas is one of the world’s leading manufacturers of flashable microcontrollers, the little brains that are inside of more products than we imagine. The chips could not be easily replaced, moving their production elsewhere would have taken nearly a year. “Carmakers, PC-makers, cellphone makers, appliance makers, all were affected,” remembers the reactivated production veteran. “We were facing a worldwide economic crisis.”
Renesas asked for help, and its main customers sent help. Toyota, Honda, Nissan, Canon and many more sent their best people to Hitachinaka, a two hour drive north of Tokyo. What they saw was disheartening.
“The building was more or less OK,” remembers the production expert. The insides of the cleanrooms were a jumble of equipment that had been thrown around by giant hands. Pipes for concentrated acid were leaking, high voltage lines were even more dangerous. “And every two hours, there were aftershocks.”
Two and a half months of repair time sounded optimistic, but our man told an assembly of aghast Renesas engineers: “I won’t listen how long it will take, we’ll finish the initial repair in 10 days.”
Thousands of people, brought in from all of Japan, went to work, 24 hours a day. Three days later, the power lines were back in place, it would have been earlier “if the aftershocks would not have made us to do our work twice.” 150 specialty chemical pumps were disconnected, sent to their makers, and were back, rebuilt and as good as new, ten days after.
1,700 machines and pieces of equipment had to be repaired, reinstalled, aligned. “Many were imported machines, and the responsible technicians had returned back to their country,” remembers the man that tells the story. With the help of Japan’s formerly formidable Ministry of Trade and Industry (MITI), missing engineers were rounded up. A large room was converted into a crisis center, where the team leaders assembled twice a day. The rules were simple: If something works, don’t report it. If there is trouble, report it and ask for ideas.
The basic repairs were done within ten days. End of April, the machines were running. “All were perplexed,” remembers the unsung hero, “full production was established in August, six months earlier than originally estimated.”
The Renesas recovery saved many billions of dollars, and prevented a crisis that would have impacted many industries. Remembers the anonymous retiree, who says he was just one of nearly 100,000 people worldwide who helped bring Renesas back on-line:
“I wish they would have given us just 10 percent of the savings as a fee. Nobody gave us anything, but anyway, we did what we needed to do.”