Industry fearful of Japanese parts drought

MOTOR manufacturers around the world are hoping for the best and planning for the worst as parts made by Japanese companies hit by the recent earthquake and tsunami begin to dry up, forcing factory shut-downs and go-slows as far afield as the United States and Spain.

General Motors has issued an extraordinary company directive to all its branches – including GM Holden – to conserve cash by cutting spending until it can assess the full impact of the Japanese supply situation.

Even air travel by GM staff to conferences and other events has been put on hold for 30 days on the orders of GM CEO Dan Akerson after GM had to shut production at one United States plant and two in Europe.

All three Australian car-makers – GM Holden, Ford Australia and Toyota Australia –say it is business as usual at their local factories, but they all concede that they rely on certain Japanese-made components for their vehicles.

Holden director external communications Emily Perry told GoAuto that production of both Commodore and Cruze at Elizabeth, South Australia, and V6 engines at Port Melbourne, Victoria was continuing.

“All we’re saying is vehicle production is not affected and we have appropriate levels of stock for the coming weeks,” she said.

But she confirmed that Holden was following a global GM directive to cut non-essential spending and put all air travel to conferences and events on hold for 30 days to conserve cash as a precaution until the full impact was known.

Left: Holden Cruze production at the Elizabeth plant. Bottom: Toyota Camry production at Altona.

Ford Australia public affairs director Sinead McAlary said the Melbourne-based company might not know until next week if its local operations would suffer any impact.

“Some Tier 1 or Tier 2 suppliers could be affected, but their suppliers may not be able to get into their plants (in Japan) for some time,” she said.

In Japan, the motor industry so far has lost about 400,000 vehicles due the factory closures in the wake of the March 11 calamity.

The longer the shutdown drags on, the more likely Australian importers will be affected by shortages of stock that is currently being replenished from vehicles still in the shipping pipeline.

Several Japanese manufacturers have resumed their own parts production to at least make sure their overseas factories are replenished. However, external suppliers are still struggling.

The parts supply problem was underlined by Honda Motor Company on Friday when it said up to 30 per cent of the 110 suppliers in the quake-hit region are having trouble restarting production.

Nissan announced on Sunday it was planning to resume production of cars and components in Japan by Thursday, but most other companies are still wrestling with a resumption of full-scale production.

The ripples from the Japanese disruption are being felt around the world, with GM having to close its Shreveport pick-up factory in Louisiana due to component shortages.

It has also confirmed that its GM Korea operation has cut overtime due to dwindling parts supplies from Japan. These factories supply several Holden vehicles including the Captiva, Barina and Barina Spark.

In Europe, GM said output of its Corsa small car had been suspended at plants in Spain and Germany because of a lack of Japanese-made parts.

French car-maker PSA Peugeot Citroen said its diesel engine production had been impacted by a shortage of Japanese-made electronics components, and was adjusting its production line speeds as a result.

It said the Japanese supplier was working hard to try to resume production within a week.

Spokesman for Citroen’s Australian importer, Ateco Automotive, Edward Rowe, said stock held in Australia and supplies in shipment would insulate local dealers from any shortages for four to five months.