Toyota, Honda say quake won't disrupt U.S. shipments
By Alan Ohnsman
Bloomberg News Service
Toyota Motor Corp. and Honda Motor Co. said a production halt at Japanese plants caused by earthquake damage at a parts supplier won't disrupt U.S.-bound vehicle shipments.
Most Japanese automakers canceled some domestic vehicle- assembly shifts after piston ring maker Riken Corp. closed 11 parts factories in the wake of a July 16 earthquake in northwestern Japan. Riken said today in Japan it expects to resume production next week.
"If it's a short amount of time, it will have no effect whatsoever," Honda spokesman David Iida said. The Tokyo-based company ships all Fit small cars to the U.S. from its Suzuka plant, which will close tomorrow because of the shortage.
Japan's vulnerability to earthquakes, typhoons and flooding has trained manufacturers to respond to crises. Toyota in 1997 avoided a massive production halt when a fire destroyed an Aisin Seiki Co. factory that made brake valves for all its models. The company contracted small machine shops to supply the parts temporarily and restored its assembly operations within a week.
Toyota, Japan's biggest automaker ahead of Honda, has dispatched more than 200 engineers to help Riken resume production, said Mike Michels, a spokesman at the company's U.S. headquarters in Torrance, Calif.
AIDING IN RECOVERY
The Toyota engineers are part of a group of more than 600 workers — including technicians and procurement experts from carmakers, parts makers and equipment companies — who have come to aid in the recovery, said Riken spokeswoman Yumiko Kanda. Nissan and Honda have also sent help.
Toyota, Honda, Nissan Motor Co., Mazda Motor Corp., Mitsubishi Motors Corp., Fuji Heavy Industries Ltd. and Suzuki Motor Corp. are among the vehicle makers that have canceled factory shifts.
Toyota relies on Japan to supply about 46 percent of its U.S. vehicles, including all of its Scion cars and all but one of its Lexus luxury models. The Toyota City-based automaker has a 27-day supply of vehicles in the U.S. currently, "and the majority of that is North American produced," Michels said.
Toyota will lose about 26,000 units of production, the result of a planned 1 1/2-day shutdown of 12 vehicle and parts factories, he said. They include the Yaris, Prius and Scion small cars exported to the U.S.
Michels couldn't say how many would be U.S.-bound. "We are usually able to make up the lost production with overtime or extra shifts," he said.
Any change in U.S.-bound shipments wouldn't occur until at least August, as dealers already have their July supply of imports or they are currently in transit, the companies said.
BIGGER EFFECT IN JAPAN?
Mazda late last year used daily overtime and weekend work at its main Japan plants to replace 4,700 cars lost when a North American-bound freighter tipped off the coast of Alaska in rough seas. "I can't tell you how quickly we'll do it this time, but we'll make up the volume," spokesman Jeremy Barnes said.
"I don't see a massive impact from this, and if anything it's likely to have a bigger effect on products for the domestic Japanese market," said analyst Catherine Madden, who studies automakers' production plans for Global Insight Inc. in Lexington, Mass.
Madden said automakers can buy parts from Riken's rivals. Teikoku Piston Ring Co. said the company had received new orders from about five carmakers since yesterday. Toyota owns 6 percent of the engine-parts supplier.
Shares of Riken competitors rose today on an expected increase in orders. Nippon Piston Ring Co. stock gained 5.3 percent to 276 yen at the close of trading in Tokyo. Teikoku shares, meanwhile, were up 6.2 percent to 994 yen.
"Carmakers should easily be able to make up lost production within a month and there will be hardly any impact on their earnings," said Koji Endo, an analyst for Credit Suisse in Tokyo.
Toyota's American depositary receipts increased $1.10 to $123.71 at 4:30 p.m. in New York Stock Exchange composite trading. Honda's ADRs climbed 23 cents to $37, and Nissan's rose 18 cents to $21.77 in Nasdaq Stock Market composite trading.
Nissan spokesman Scott Vazin and Dan Irvin of Mitsubishi Motors also said any changes in vehicle shipments resulting from the Japan shutdowns would likely be minimal and short-term.