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MI Dealers Get Updates on Japan Disaster and Automaker, Part and Financial Impacts

DETROIT, M.I. – MI dealers may feel a bigger effect from the disaster in Japan as the days of supplier disruptions turn into weeks. General Motors has already closed a plant in Louisiana while other automakers are assessing the impact of unattainable parts they may not receive for some time as well as alternative suppliers. The crisis in Japan is not a local event, but is having a global impact affecting automakers like General Motors from their manufacturing and assembly plants down to their MI dealers.

Japan's Global Role in the Automotive Industry

Every year, Japan builds more than 10 million engines with 2.5 million of that amount being shipped overseas to countries like the U.S. Japan produces a total of 17 million transmissions; 8.5 million are exported with 2 million shipped directly to the U.S. Also, Japan produces 20 percent of the worldwide semiconductor units, such as power converters and battery management, microcontroller chips, automotive specific networking chips and sensors.

According to a MarketWatch press release, Michael Robinet, an Information Handling Services (IHS) Automotive Analyst, said "If you can't get that core part, it doesn't matter if you get 50 percent of your components from Japan or just half of one percent. Welcome to the global automotive industry."

IHS Inc. offers the simplest to most complex of information about topics such as energy, electronics and automotive industries. IHS Inc. has estimated 280,000 vehicles have not been produced since the disaster in Japan, and every day 37,000 vehicles are lost every day the assembly lines are not in production.

Effects of Halted Production in Japan and Impact on U.S.

General Motors

Today MI dealers may have heard General Motors halted production as it suspended its Shreveport, Louisiana assembly plant. The direct cause, according to the automaker, was due to the shortage of parts from Japan. The Louisiana plant employs 800 factory workers and makes the GMC Canyon and Chevrolet Colorado small pick-ups. There is no announced time when the plant will be reopened.

Toyota

From Monday until Wednesday, Toyota Motor Corp suspended all manufacturing assembly and parts plants with an estimated 40,000 vehicles not produced in those three days. The North American plants have slowed down their production to conserve parts as 20 percent of their needed parts ship from Japan.

Nissan

Nissan had closed down at least five assembly and engine plants for at least three days and is worried about the lost vehicles that were destroyed in the tsunami at the Port of Hitachi. About 1,300 Infiniti vehicles that were being exported to the U.S. were lost. Also due to port issues, shipments with vehicles such as the Nissan all-electric Leaf, Nissan GT-R and Nissan 370Z may have been delayed to the U.S. as well.

Honda

All Honda plants are still offline and will be until Sunday, March 20. The production lost will be about 16,600 units, which includes 2,500 vehicles like the Fit, Insight Hybrid and Acura RL; all were bound for the U.S. Honda is unable to reach 44 of it 113 suppliers.

"We cannot complete a car, even if one or two parts are missing," Honda spokesman Keitaro Yamamoto said in an Automotive News press release. "So it's better that we stop production altogether."

Other Automakers

Other companies that have halted production between two days and a week include Mitsubishi, Mazda, and a Subaru partner Fuji Heavy Industries Ltd.; Fuji halting productions means fewer Forester and Impreza exports to the U.S.

"Given the 20,000 to 30,000 parts that go into making an automobile, and the difficulty of procuring even basic materials," wrote Kohei Takahashi, an auto analyst with J.P. Morgan Securities in Tokyo, in a report. "We do not foresee a return to normal production schedules anytime soon."

A Ford Spokesman, Todd Nissen, said, "We have not had any supply disruptions at this point. But like the rest of the supply base, Sanyo is continuing to assess the situation." Similar statements were made by Chrysler Group.

Impact on U.S. Financial Market

On Monday, the Dow Jones dropped 12,000 points, which is the first time this has happened in two months. MI dealers may have seen General Motors' IPO price drop from $33 down 34 cents to $31.59 while Toyota lost $3.92 at the close for the New York Stock Exchange on Monday.

Some like George Peterson, Chief Analyst with AutoPacific, believe that real disruptions won't begin to hit the North America sector until April as everything catches up.

There is a lot going on around the country due to the disaster in Japan. As a global market everything is intertwined with each other.

Check back for more updates from MI Auto Times about the disruptions of the automotive industry.

 

About the Author

MI Auto Times covers all Michigan automotive news all the time, featuring newly released vehicle recall information, relevant Michigan automaker news, vehicle ratings and comparisons, and everything else auto-related Michigan and world readers need to know.

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[Source(s): Automotive News, the Detroit Bureau, MarketWatch]

 

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