By on March 25, 2011

So far, it had been clear that the March 11 earthquake and tsunami would create big problems for the auto industry in Japan in particular and worldwide in general. When asked when, where, and how much, all we received were shrugging shoulders when taking to a westernized counterpart, or an “eeeh” or the customary sucking of air through the teeth when talking to an old school Japanese.  Now finally, the first facts emerge.

The Nikkei [sub] confirms our estimate and that of IHS Automotive of this morning and figures that “Japan’s major automakers will produce about 400,000 fewer vehicles domestically” this month alone. (Expect this number to rise, just like all the other numbers.)

The Japan Automobile Manufacturers Association says that a large number of parts are in short supply. According to the group, the supply of basic items such as engine control units, brake parts and even steel sheet is most severely affected.

Renesas Electronics, the world’s largest producer of automotive semiconductors, plans to restart its main plant in Ibaraki Prefecture in July. The company will try to fabricate chips at its acilities in western Japan and by outsourcing from overseas.

Hitachi Automotive Systems Ltd. resumed production of suspension systems at its Fukushima plant on Friday. Keihin Corp. has begun making engine control units and other components on a trial basis at an affected factory in Miyagi Prefecture.

Most automakers still do not have a clear picture. The Nikkei says that Toyota “intends to gather information from affiliated parts suppliers and others to gain a complete understanding of the extent of the damage by month’s end.”

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26 Comments on “First Facts Emerge In Japanese Parts Paralysis...”

  • avatar

    Chasing down electronic components is how I spent part of my day.

  • avatar

    After the Toyota recall smear campaign by the Obama administration, the UAW protests with crude signs in front of Toyota dealers, and the legion of paid posters that make negative comments about Japanese cars daily, you can bet the Japanese suppliers will send parts to Detroit only after Toyota and Honda have every part they need.  Detroit executives must be having nightmares.

    Dishonesty always comes back to bite you.

    • 0 avatar



      Still waiting for my paycheck.  Paid protesters…you mean like Mommy’s Blog or whatever it was failed attempt at astroturfing by proxy for Toyota in a rogue effort?!?  I want my Amazon gift card DAMNIT!!!

      Suppliers aren’t going to withhold parts from company A or B – that is just ignorant. The company that is writing the biggest P/O and willing to pay the biggest expediting fees will get the parts first.  That’s supply chain 101 lesson of the day.

    • 0 avatar

      Why bother with a response.  Mr VA jj blames a rainy day on anything that’s not written in either CR or the Libertarian’s Daily.  I know it is hard not to feed the trolls when the bait is a large helping of ignorance, but we all must try.

  • avatar

    Based on this and an article I read earlier ( it sounds like steel is in very short supply.  I guess that makes sense if you consider how energy intensive it is to make.  How much steel is going to go towards autos and how much will be diverted to rebuilding?  Are the automakers going to import the steel they need?  Automotive grade steel is hard to come by, I wonder if we’ll see Japanese cars built with lower grade Chinese steel?

    • 0 avatar

      I wonder if Detroit will get any of the Japanese microprocessors and electronic controls in short supply.  The Japanese have an ax to grind with Detroit after the Toyota recall smear. If Detroit can’t get the microprocessors and electronic controls, Detroit will not need any steel because they will not be manufacturing anything. Therefore, pleanty of high grade steel will be available for the Japanese.

    • 0 avatar

      @jj99 It might interest you to know that both the UAW and CAW have orginized a campaign of fund raising through thier collective social justice fund. All monies wil be directed to the Japanese people in thier time of need.

      So perhaps you direct you venom in the form of a check,

    • 0 avatar

      Interesting point. The US steel industry has rebounded a lot in the last decade with smaller, “botique” manufacturers providing high quality steel in profitable operations. It is a mini success story (or would that be treading water) in an overall rather dim picture for US manufacturing in general.

      I was just reading that Toyota only employs 25K fulltime employees now in North America for R&D and manufacturing, that is a major reduction of the 34K number that was floating around before the 2008 meltdown. I’m wondering if Toyota is eyeing NUMMI and Tesla and thinking how ramping that facility back up in a sharing arrangement could help, or accelerating the Mississippi facility rollout post-part production issues solved.

      I think there is a bigger picture question not being asked here. Once the deals with external manufacturers outside of Japan have been cut, will the jobs EVER return to Japan in the first place, or will they remain outsourced as it is likely it will take years to rebuild overall. These Japanese jobs and parts may not be gone for the short term, they may be gone forever.

      Another thing to consider, given the overall weakness of the US economy, a fair amount of state tax incentives for manufacturing jobs, and the weak US dollar, could some of these parts and semiconductor jobs return to North America?

      A lot of longer term variables with a lot of globalization answers tied to them.

    • 0 avatar

      @mikey, rethink that thought.  Do you think the UAW/CAW can throw some pennies over to Japan and all the bad blood will be forgiven?  I don’t think you can buy your little problem away the same way you buy the support of American politicans.
      Watching the grandstanding of the American politicans and the UAW against trumped up Toyota allegations was sick.  I had to turn off the TV.
      I hope the dirty politics played by the domestics, the UAW, and the American politicans against Toyota never happens again.  Now, Japan has a chance to play some dirty politics against the people that wronged them.  Consider many of the large Japan auto suppliers are partially owned by Japan auto manufacturers.  I would bet Japan will supply scarce auto parts to their own.

    • 0 avatar

      Keep in mind that Toyota wasn’t exactly innocent during the whole recall fiasco.  It was shown that they were aware of the issues regarding sticky pedals and floormat entrapment well before the recalls were issued.
      It may be that in the end there was no proof found that Toyotas were susceptible to the sudden unexpected acceleration, but that was only part of the issue.  In fact, Toyota executives freely admitted that safety issues were overlooked, many formal apologies were given, and actual changes were made to keep the situation from happening again.
      There are those who view the whole escapade as political grandstanding and a vendetta, but I believe the truth is far less sinister.  Perhaps Toyota was handled a bit roughly and made an example of, but if you pay attention, you will see that all automakers, both foreign and domestic, have been far more forthcoming with recall and safety information early on since the whole SUA saga played out.  The point wasn’t to beat up Toyota for political reasons – it was to show that no automaker can put lives at risk to help the bottom line.

    • 0 avatar

      I would bet Japan will supply scarce auto parts to their own.
      Japan isn’t the only source for components. Hyundai Mobis and the Chinese are there if the Japanese companies ever try screwing over the non-Japanese companies.  Don’t underestimate the Chinese. They have some good engineers and I’ve seen some really good stuff from them recently. I think they’re going to catch up to the Japanese faster than most people think.

  • avatar

    I would think that the Japanese would ship whatever they could build to whoever would pay money for it and worry about sentimentality later.  Sure, they might concentrate on getting their own ducks in a row first, but they do make good money supplying the rest of the world.

    • 0 avatar

      Exactly. Who is writing the biggest PO, paying the highest expediting fees, giving the best payment terms, and being the most flexible. That is the company that will get the parts first.

      Somewhere in Japan, a hurried business manager calls one of his business development managers…

      So Hiro San, how is that 6-billion Yen parts order for Dodge coming, are we signing the deal today?

      Oh that order, oh, I’m mad at Chrysler and the President Obama so I tore it up, I’m still waiting for Honda to reopen their factories, when they finally start production they’ll need those semiconductors – I can close that deal in July or August.

      What?!?  I am not very happy.  Hiro San, could you come to my office and bring all your pesonal belongings with you. We have a nice person from HR that would like to talk to you.
      Ashiko San, can you get Hanji San on the phone and tell him to get to work on that Chrysler order that Hiro was working on immediately.  Thanks.

    • 0 avatar

      You’re making a mistake in thinking the Japanese will whore themselves out for the highest bidder – those people are called Americans.  The Japanese will take care of the Japanese first and whore everybody else out to the highest bidder for the good of Japan.  Which is how it’s supposed to be done – we should take a lesson.

    • 0 avatar

      caboz, your point is well taken.  The American business model always is sort term profit first…not always the best course of action.

  • avatar

    Add Mazda to the list.  They are temporarily suspending dealer orders in the US due to shortages of parts from Northeast Japan.

    • 0 avatar

      And Ford can’t make black or red SUVs because of a lack of paint from Japan …

    • 0 avatar

      Regarding the paint:
      Placement of orders for Expeditions, Super Duties, Navigators, and F-150s with the Tuxedo Black paint is on hold, but orders already in the chain will be built until the paint runs out, and general stock orders will be built in other colors, so it isn’t a production freeze, just a shift to available paints.
      Orders for Trucks and SUVs and built in the US plants and the 2012 Focus in Red Candy or Royal Red are not yet on hold, but estimated final week of production in those colors are only a few weeks away, and when the paint has run out, they will have to be made in other colors. Explorers, Tauruses, and MKSs are in the Tuxedo Black color are in a similar situation.
      At this point there hasn’t been any mention of holds on orders for vehicles produced in the Mexican or Canadian assembly plants.
      Tuxedo Black, Red Candy, Royal Red, and Red Fire are the only colors that this pertains to, other shades of red and black are unaffected.

      Ford is expecting to have either a new way to formulate the current colors or similar replacement colors ready by the time the current paint reserves are expended, so any interruption in color availability should be minimal.

    • 0 avatar

      @NulloMundo, but it just goes to show that even an all American Ford SUV still has parts coming down the supply chain from Japan. The opposite is also true even though few people realize it; I work with US semiconductor companies who supply unglamorous but vital electronics to car manufacturers in just about every part of the world.

  • avatar

    Great information.

    I think all of us are curious to see what happens in Japan long term.

    The radiation reports seem to get worse and worse every day and seem to reach further and further from the plant.

    Early on, American ships 250 miles off shore detected radiation in the early days of the accident. Then, nothing was ever heard again about it.

    The lack of trust of Japan’s own citizenship of its government is well deserved and is just shrewd business when dealing with the information diseminated by its leaders.

    We may never know to what extent radiation has contaminated the country until years from now when the youth of that country begin to show signs of thyroid and lymph node cancer.

    I, for one, am really concerned about the global effects if Japan can not or will not rebuild as the third largest economic power.

    We still have Ireland, Greece, Portugal and all the other unrest in the world to contend with. Will America be able to bear the added burden while still trying to recover from this recession?

    Will energy speculation drive fuel costs beyond our capability to adapt economically?

    Hang on to your hats. It is going to be a bumpy ride.

    • 0 avatar
      Bill Wade

      I, for one, am really concerned about the global effects if Japan can not or will not rebuild as the third largest economic power.
      The Japanese will come out of this stronger than what they went in. Japan has been stagnating for a number of years. I think this will be the catalyst for changing this. I lived there for a couple of years and not rebuilding wouldn’t even cross their minds.
      As crazy as this sounds they may well go in to the flooded areas and rebuild them exactly like they were before. The Japanese are a very conservative and traditional society.
      Also somebody mentioned the Japanese suppliers retaliating against American manufacturers. Face is extremely important and they’ll do their utmost to fulfill contracts.

  • avatar

    At some point, production is going to have to be higher than normal to replace the cars destroyed in the disaster.

  • avatar

    Another concern that hasn’t been brought up yet is the strong yen making Japanese imports more expensive after some production is restored assuming the yen stays up that long. This presents an opportunity for other manufacturers if they son’t blow it by raising their prices. Of course it’s also an opportunity for Japanese companies too becaue they can expend their operations in this country.

  • avatar

    From my limited contacts with Japanese people (who are working in the US), they seem to be smart and resilient, and I think they will rebound more quickly than we’re assuming. I believe these interruptions to domestic US production will be short term, as the mfrs. will find alternate sources for the parts needed. Human beings as a whole, are rather ingenious, and when it’s very important, we find a way to get things done. I think this will apply to the Japanese people, too. It may not be ‘business as usual’, but they’ll get it going.

  • avatar
    John Horner

    The big challenge to many Japanese suppliers is that once customers have found alternative suppliers it becomes hard to win that business back. Some of the business will be gone forever. Before the earthquake, many Japanese auto companies were talking about moving more of their production work out of Japan. This may just accelerate the already existing trend.
    Japan’s major strategic problem is its rapidly aging and dying off populace. Japan is generally not friendly to incoming immigration, so no help there. Japan’s women are not having babies anywhere close to fast enough to replace the dying. An aging AND shrinking population is not the thing robust economies are made of.
    Many say that demographics and geography are destiny. If so, Japan has long term troubles far beyond this catastrophe.

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