Home' Charter : 1011 Charter Contents 38 Charter I October 2011
Lead > Car industry
Australia was not the only country
affected by the knock-on effect of Japan’s
earthquake, tsunami and power station
The disruption to the manufacture and
export of all types of components from
satellite navigation systems to brakes,
paint and computer chips hit dozens of
car factories worldwide within days of the
event, highlighting the inherent problems
of a completely globalised industry which
manufactures on a just-in-time basis.
In the UK, Honda announced a two-
day week for its workers, with Nissan and
Toyota following suit. A British industry
analyst suggested at the time that around
one million fewer vehicles would be
produced around the world this year as a
result of the disaster.
It was a similar story in the US,
with production lines being slowed to
conserve supplies of Japanese-sourced
components. Toyota was the hardest hit,
but not the only one. Many Japanese car
companies have production lines in the US
to supply the local market more effciently
and use local suppliers too, but they still
source between 15-35 per cent of their
parts from Japan.
It wasn’t just the Japanese car
manufacturers that were affected. Both
European and American companies found
themselves short of vital components.
For instance, Ford depends on a Sanyo
plant in Japan for battery packs for several
of its US models, while Chrysler Group
sources 5 per cent of its components from
Japan. Obviously, the concern was, if you
run out of parts that you can only get from
Japan, how long before you get more? And
that was another part of the problem – the
major supplier may not have been affected
but if the smaller component manufacturers
supplying them were affected, the end
result was still the same.
There was also the issue of supply of
cars themselves. Many premium models
(Lexus, Infniti etc) come from Japan, as
do many of the Toyota and Honda hybrids
and many of the popular small SUVs. As
it happened, it is taking a few months
for supply to catch up with demand – or
outstanding orders – but by early 2012,
business is expected to be back to normal.
That’s certainly the situation according
to Mike Michels, communications chief for
Toyota USA, which expected to be back
to 100 per cent manufacturing capacity as
Charter went to press.
“The recovery has been a remarkable
effort by the manufacturing side. Our dealer
inventory hit bottom and is now on the way
back up. There was a period when dealers
had no visibility of what was coming so they
weren’t as aggressive in their selling, but they
now can see the pipeline is operating again
and are selling with greater confdence. We
can get the right car for the customer, though
it may take a bit of time for some models.
“Remarkably there was no impact on
repair and service parts. There were a small
number of parts that were available, but
only released to a dealer with a specifc VIN
number for a customer vehicle. We didn’t
want dealers stockpiling. But that didn’t
last long. For the most part, repair parts
are for previous models and come from
“Times were very tough there for a while
but the best part is we had no staff layoffs!”
THE STORY ELSEWHERE
on the water on its way,” says Breen.
“And we had planned to have the facelifted
HiLux and the new Yaris here in August
and September respectively but they were
delayed by about four weeks. Now it’s pretty
much business as usual.”
Much of the credit for the surprisingly
swift recovery of the industry is due to
the Japanese Automotive Manufacturers’
Association which co-ordinated with the
different brands, looking for ways to share
manufacturing of components so that no
single company was left shorter than another.
Anything from power supply to allocation of
components to shipping arrangements was
shared and all the companies complied.
Interestingly too, there seemed to be
little effort by manufacturers untouched by
the disaster to capitalise on the situation.
One reason, of course, is that production
numbers are set each year and ramping up
to build extra cars is not something that can
be done in a hurry, but a source from one of
those companies – who did not want to be
quoted – says explicit orders had come from
on high, saying there was to be no attempt
to beneft or gain any advantage from the
misfortune of others.
Since the disaster, experts in the industry
admit there has been some soul searching
about just-in-time manufacturing and
diversifying parts suppliers – just in case
there is another such crisis.
In good times, the just-in-time process –
where cars are built as required and parts
come as needed, rather than being on hold in
warehouses (with the associated cost) – is an
extremely effcient way of operating because
it saves money in storage and distribution.
However, before the events of March, it would
have been diffcult to imagine just how badly
the supply chain would be disrupted.
There are tricky issues surrounding fnding
alternative suppliers too. For starters, it’s a
long and expensive process to guarantee
quality and reliability. Theoretically, you
could buy a part from another supplier in
another country, but the question is whether
it has been designed and manufactured
in a way that meets the expectation of
the car company and the government
standards of the country where the vehicle
will be operated (here, the Australian design
rules). If not, what are the risks and legal
obligations if that part fails because it
doesn’t meet those standards?
At this point, those conversations are
taking place around the industry, but no-
one is owning up to making any decisions
Read Liz Swanton’s car reviews every month in
Charter. See page 65.
FJ Cruiser: launched
one week before the
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