Parts Paralysis: Honda U.S., Canada, And Mexico To Be Next
As early as a week from now, Honda’s North American production in Ohio, Alabama, Indiana, Canada and Mexico will be affected by the Japanese parts paralysis. Bloomberg talked to Natsuno Asanuma, Honda’s spokeswoman in Tokyo. She said workers will be informed once Honda has decided on a production plan.
The Columbus Dispatch reports from Ohio that “temporary interruptions” will begin there on April 4, and that Honda “does not yet know how much of its production may be halted, the duration or how the changes may affect employees.”
Honda gets more than 80 percent of its U.S. sales from vehicles made at North American plants, the highest proportion among Japan’s carmakers. This does not shelter the production from parts outages in Japan. In Japan, Honda’s supplier base is one of the hardest hit.
“This is just a beginning,” Mitsuo Shimizu, an equity analyst at Cosmo Securities Co. in Tokyo told Bloomberg. “More companies will be forced to suspend production. ” One does not need to be a sage to come to that conclusion.
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="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Just because you are buying a vehicle from the Detroit 3, it doesn't mean that all of its parts are sourced from North America. I remember the ruckus on some forums when GM put a Chinese engine and a Japanese transmission in their Chevrolet Equinox. http://wot.motortrend.com/gm-putting-chinese-engines-in-its-compact-suvssince-2005-247.html Ford uses Kumho tires that are made in China on their low-end F150.
Not only is the solution more complicated than saying we should "buy American" (due to numerous Japanese parts in "American" cars), even if were that simple I'm afraid the dealers of U.S.-built vehicles would screw things up in the long-run. If - and I repeat, IF - there were an ample and ready supply of U.S.-built vehicles built without Japanese parts, here is my opinion of what would play out: Instead of using this opportunity to build long-term relationships and goodwill by selling U.S.-built vehicles to former import buyers at a fair price, past experience suggests that dealers would instead turn to price gouging, claiming that "supplies are low." Then, when supplies of Japanese vehicles and parts stabilize, those who bought U.S.-built vehicles during the shortage will find that their trade-in value is relatively low, because the original price paid was too high, and because used vehicles will be competing with a pent-up demand for Japanese vehicles. So a possible long-time buyer of American vehicles will again be lost forever, because they "simply don't hold their value." Yes, it's the simple law of supply and demand, but it illustrates how our addiction to short-term profit may be killing any hope for long-term, sustainable growth and profitability of the domestic vehicle industry.
No more instant gratification... upto recently (last 30 years), it was normal to wait for something if you wanted it. The Mercedes S123 had a two year waiting list in the early 1980s I believe. I predict those who want a Japanese or European car will not "buy American" simply because they cannot get their car tomorrow - they will learn to wait a few months.
Bertel - I would love to see a post about that parts crisis as it applies specifically to the domestic automakers, I've heard only whats been in the MSM (Chevy Colorado plant shutting, Ford paint problems) but I'm really wondering if U.S. manufacturers will come out as 'winners' in this crisis, or if everyone loses. Any information that you or the B&B might have on specific U.S. part supply problems beyond mere speculation would be of great interest.