Toyota Motor Corp the world’s biggest-selling automaker will suspend much of its production at plants across Japan this week following the twin earthquakes that devastated the island of Kyushu, which not only killed 41 people and displaced thousands of others, but also led to a shortage of parts. At the same time, Honda Motor Co. stated that it would keep production suspended at its motorcycle plant near the quake-hit city of Kumamoto in southern Japan through Friday, although Nissan Motor Co announced it would resume operations at its plants north of the epicenter from Monday.
Meanwhile, semiconductor manufacturer Renesas Electronics Corp confirmed it had sustained damage to some equipment at its plant in Kumamoto, which produces microcontroller chips for automobiles. They will now look to assess damage to their entire facility before making any decisions on when they will be able to resume production. Renesas had previously admitted to not stocking extra inventory for risk management purposes since that disaster, but has since commenced to standardize more parts across various models in order to “enable in house production at alternative plants during emergencies.”
Similarly, Japanese manufacturers have striven to address these problems after a 2011 earthquake and tsunami, which led to a nuclear disaster and nearly 20,000 deaths, badly dented output. In fact, Nissan and Toyota have both developed supply chain databases, which offer a detailed view of their supplier base to identify how their supply chain may be disrupted during emergencies.
This halt of business is Toyota’s 2nd in Japan this year, following production stoppage in February when a fire at an affiliate’s steel plant resulted in a week-long gap in supplies and drove the car company’s global production down around 4%t on an annualized basis in the first two months of 2016. Domestic production has accounted for roughly 40% of Toyota’s global output, with nearly half of all its vehicles produced in Japan exported to markets overseas.
In the meantime, Aisin Seiki, whose plants in Kumamoto sustained damage from the quake, said it would make sunroofs, door handles, semi-conductors and other products for the auto industry in other facilities at home and abroad.
“If there’s a part we make in Kumamoto which is identical to a part we make at the Aisin headquarters in Aichi (in central Japan) we’ll shift production there,” an Aisin spokesman said.
Aisin stressed that it had kept to the “just in time” system, and hadn’t built up big inventories, but instead did have robust plans for shifting production elsewhere.
“As a Toyota-affiliated company, we don’t hold significant inventory,” the spokesman said. “So as a rule we wouldn’t have been holding inventories to last, say, one week or a month.”