Honda to cut North American production; Toyota may follow
April 4, 2011
By With files from The Canadian Press
North American manufacturing plants are finally starting to feel the pinch from the earthquake and tsunami that rocked Japan last month.
Toyota Motor Corp. said Monday that it’s inevitable the company will be forced to shut down all of its North American factories because of parts shortages in Japan.
Toyota’s temporary shutdowns are likely to take place later this month, affecting 25,000 workers across the continent, but no layoffs are expected, the company said.
“We do anticipate some non-production time in North America, but the location, timing and duration are unknown for now,” said Pat Clement, assistant manager of external affairs at Toyota Canada.
She said conditions in Japan remain difficult, and it is hard for the company to nail down any issues with the parts supply chain.
In Canada, Toyota operates two assembly plants in the southwestern Ontario communities of Woodstock and Cambridge, and employs about 6,500 people.
Just how long the shutdowns last or whether all 13 of Toyota’s North American factories will be affected is unknown and depends on when parts production can restart in Japan, said Toyota’s U.S. spokesman Mike Goss.
So far the North American plants have been using parts in their inventory or relying on those that were shipped before the earthquake, Goss said. But those supplies are running low.
“We’re going to get to a point this month where that gap in the pipeline starts to show up. So we’ll have to suspend production for a while,” he said.
Toyota gets about 15 percent of its parts from Japan for cars and trucks built in North America, “but still you have to have them all to build the vehicles,” Goss said.
Toyota, he said, has about 500 companies supplying parts in North America, but many of them get components from Japan that might not be available.
The shutdowns will affect all Toyota and Lexus models made in North America, he said. Already several large dealership chains are predicting shortages of models from Japanese automakers in the spring and summer.
Goss wouldn’t estimate how long the assembly lines would be shut down. “It depends on how fast we can help get those suppliers up and running again in Japan,” he said.
Meanwhile, Honda Motor Co. announced last week that it will temporarily cut production at its North American auto factories on a plant-by-plant basis, as a result of the parts shortages.
Honda said in a statement that it will keep all plants open, but it will cut the number of hours that some assembly lines operate each day. Cuts will vary by plant and model. The auto giant said that the factories will remain open because most of the parts in cars built in North America come from the region; however, it gets a small number of parts from Japan.
The statement didn’t say which North American plants would cut production or what models they make. Honda has factories in Ohio, Indiana, Alabama, Georgia and Ontario.
“All plants are remaining open, but some are reducing production at varying levels from day to day,” Honda spokesman Richard Jacobs said.
He said the Canadian plant in Alliston, Ont., would be among those affected.
“There will be no layoffs. When non-production hours occur, production associates will have the option to work, schedule vacation or take time off without pay,” Jacobs said.
Toyota and Honda are not the only automakers affected. Ford Motor Co. and Nissan Motor Co. said that several North American plants would be closed part of this month, and Chrysler Group LLC is cutting overtime at plants in Canada and Mexico to conserve parts from Japan. Chrysler plants in Brampton, Ont., and Toluca, Mexico, are affected by the change. The Brampton plant makes the 300 sedan, Dodge Challenger and Dodge Charger. The Toluca plant makes the Dodge Journey and Fiat 500.
A March 11 earthquake and tsunami damaged auto parts plants in Northeastern Japan, causing shortages that idled most of the nation’s car production. Japan’s daily auto output has fallen by more than 500,000 vehicles since the disaster, says Scotiabank senior economist Carlos Gomes. Some manufacturers are bringing plants back on line, but only at low speeds due to a lack of parts.
-With files from The Canadian Press
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