Will Japan halt the production line?
A shortage of parts means factories are being forced to temporarily close or reduce output. This will delay deliveries of new cars already on order and result in future stock shortages, with a knock-on effect for the used-car market.
Business as usual?
Outwardly, manufacturers say it is ‘business as usual’ and that they are not facing parts shortages – ‘at the moment’. However, it is widely believed that serious shortages are just a couple of weeks away unless alternative suppliers can be found for some components. Production bosses are scouring the world to find new sources for items that would normally come from Japan.
Cuts in production planned
Honda is cutting production at its North American factories by up to 50% because of the disruption to parts supply, while Toyota and Lexus dealerships in the US have been warned that there will be a shortage of more than 200 spare parts for at least a month.
Ford plans to shut its factory at Genk, in Belgium, for five days from April 4 to conserve supply stocks, while General Motors – the parent company of Vauxhall in the UK and Opel in Germany – and Peugeot-Citroen have already reduced production with the same intention.
Carlos Ghosn, the head of the Renault-Nissan alliance, says that 40 of the alliance’s suppliers in Japan remain ‘hampered’ because of the devastation, while Volkswagen CEO Martin Winterkorn says that although the group has not been affected yet and is well supplied until the end of next week, it can't plan beyond then.
The great unknown
One of the main problems is that many car components are made up of lots of smaller parts, and the location and fate of some of the companies that supply these vital elements is simply not known.
Most car factories work as closely as they dare to a just-in-time production schedule, so that parts arrive at the assembly line only when they are needed, to reduce expensive over-stocking. However, when supply is interrupted, the whole house of cards can collapse.
What is not certain is how many sub-contractors have been affected by the earthquake and tsunami on March 11, and when – or if – they will ever be able to get back to normal.
Robert Bosch, a major supplier to almost every car manufacturer in the world, has 8000 ‘associates’ in 36 locations in Japan, along with another 550 sub-contractors. The parts it supplies from Japan include fuel injectors and injection products, pumps, electronic control systems, hydraulics, packaging and security features.
With such extensive damage in the earthquake-affected zone, Bosch has simply not been able in the two weeks since the disaster to assess what interruptions it could face.
‘As far as we're aware we have been quite lucky, but we aren't able to confirm that,’ said a Bosch spokesperson. ‘On the production side we have started up again at most locations on a limited basis, but there are power cuts most days. We are working with our suppliers systematically to get to the bottom of it, but we are still in the assessment phase.’
Short-term planning only
Car manufacturers, meanwhile, can't look further than a week ahead until they know the extent of any disruption to supplies.
Anyone who has seen the recent film Made in Dagenham – about the equal-pay strike by a group of female machinists that crippled Ford’s Dagenham and Halewood factories in the 1960s after the supply of car seats and trim ran out – will know it takes the absence of just one component to bring production to a standstill.
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