First Facts Emerge In Japanese Parts Paralysis

Bertel Schmitt
by Bertel Schmitt

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.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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5 of 26 comments
  • Brandloyalty Brandloyalty on Mar 25, 2011

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

    • Vbofw Vbofw on Mar 26, 2011

      it takes roughly six days of overtime to make up for a lost day of production. so they'll likely be chasing the puck for a while

  • MikeAR MikeAR on Mar 26, 2011

    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.

  • Geozinger Geozinger on Mar 26, 2011

    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.

  • John Horner John Horner on Mar 26, 2011

    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.