Japans Auto Industry Unites To Cope With Disaster – And The Unknown

Bertel Schmitt
by Bertel Schmitt
japans auto industry unites to cope with disaster 8211 and the unknown

There are gallant, yet disturbing news coming from Japan’s automaker front. Japanese automakers unite to cope with the disaster. “Automakers have set up a joint headquarters for support measures and are sharing damage reports and other information,” reports The Nikkei [sub]. “They have a plan that aims to provide more effective support by dividing their forces by region and building teams on the fly. Staff from, say, Toyota may end up lending a hand to a parts maker that does business with, say, Nissan.” According to the Nikkei, Japan’s automakers also have come to a “silent understanding” to not to compete for who might be first to restart production. What is causing the sudden unity amongst former bitter rivals?

Japan’s car manufacturers are nearly fully operative. Amongst the larger ones, Toyota escaped relatively unscathed. Their main base is some 200 miles south of Tokyo, well outside of the disaster zone. Nissan, except for the engine factory in Fukushima, looked ok. Then last week, Nissan’s Jatco transmission factories were damaged by a separate 6.2 earthquake. Honda was harder hit. The roof of their R&D center in Haga, Tochigi Prefecture, collapsed, killing one employee. Still, Automakers could start production. Why don’t they?

When the quake it, Honda, like all other automakers, had sent all people home. All except Purchasing. On the day after the quake, Honda Purchasing relocated to Honda’s Saitama plant. About 100 employees started calling suppliers.

“Altogether, the company has 113 suppliers in areas that reported tremors of at least 6 on the Japanese seismic intensity scale,” says The Nikkei. “As employees kept updating handwritten charts showing the extent of damage and which parts would be hard to come by, the gravity of the situation became clear.”

This is where the Nikkei story abruptly ends.

The unsaid part seems to be what is uniting Japan’s automakers. There appear to be serious problems at the supplier base.

Japan is on a holiday (Spring Equinox) today and nobody is answering telephones. Not that they would have much to say anyway.

“As the week ended, Japan’s auto companies were still struggling to get information from their thousands of suppliers around that nation — companies that also export materials and components to U.S., European and Asian customers,” writes Automotive News [sub] “In some cases, purchasing managers in Japan couldn’t even communicate with suppliers let alone assess the damage to the parts plants.“

From the little we know, the situation at many tier 2 and 3 suppliers could be grim. This, and the rolling blackouts, affects all makers. Through March 23, plant shutdowns will have caused 285,000 units of lost production amongst all Japanese automakers, says the global forecasting firm IHS. More than 100,000 of those are from Toyota.

While we are waiting to hear (and trying to find out) what really happened, the press stateside gets hysterical. “Americans have begun snapping up Toyota Prius, Honda Fit and other fuel-efficient models made only in Japan almost the way shoppers denude bread and milk shelves in a supermarket when a storm is predicted,” writes USA Today under the headline “Panic buying raises prices on Prius, Fit.” Only to report further below that according to TrueCar.com, the average price paid for a Prius in the U.S. rose $135, or 0.5%. Fit was up $21, or 0.1%.”

And there is another effect. “UAW Bob King has made organizing foreign owned “transplants” a priority,” muses CBS from Detroit. “Analysts say King may have to focus on European automakers first, while the Japanese companies get back on their feet.”

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4 of 5 comments
  • Twotone Twotone on Mar 21, 2011

    Sounds like the beginning of a Japanese car cartel.

    • See 1 previous
    • Otterpops Otterpops on Mar 22, 2011

      That's "keiretsu," and it isn't anything like a cartel. http://en.wikipedia.org/wiki/Keiretsu It has nothing to do with controlling competition on any level where there are external sales.

  • SCE to AUX SCE to AUX on Mar 21, 2011

    I don't have a problem with cooperation among those manufacturers; this doesn't diminish their competition between each other. They're just trying to survive this mess, and a little cooperation is necessary.

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