Living with container transit times in your head, you know when the parts pipeline from Japan to overseas locations should run dry. Japan to Europe is about four weeks. And exactly 4 weeks after the tsunami hit in Tohoku, Honda will set its Swindon plant in the UK to max conserve. According to Reuters, Honda will reduce its UK output by half, starting on April 11.
Once parts supplies have stabilized, full production will resume.
That, however could be a while off. Like the other majors, Honda will begin production in Japan on March 11. Most likely, Honda will go slow at home. The Japanese industry battles with parts outages and missing parts. All eyes of the industry are on the Japanese factories and how they will do in the coming weeks. And in any case, once the pipeline starts to fill, it will take a month again for parts coming out at the other end.
I have a feeling this is only the begining of a rash of economic difficulties Japan and the rest of the world will face for years to come. Radiation levels seems to be far from under control, as well. Only time will tell how badly it will affect the American economy and others. Milk is said to be carring radiation in California and Arizona already!!! Our government sounds like the Japanese leadership in saying that are all within safe levels!!!!
+1 westcott
The tsunami aftermath, and the ensuing horrors for the Japanese will be felt throughout the world’s economy, and may cause another financial meltdown as in 2008. A lot of businesses and families barely escaped then – the next one is going to devastate the world’s economic structures.
My partner and I cut costs, restructured some of our processes, and didn’t replace two employees that left. We survived, but if 2008 happens again and takes out some of the economy, we may not survive the next round.
I am truly frightened for the first time in years.
A shortage of Japanese cars will still benefit Japan in the end as people will realize that they are still better after being forced into an EMP-equipped VW or recall-whore Ford.
How can you continue to produce those horrible vehicles without the electronics that are in them that are sourced from Japan?
Methinks if you think about it for a second and ignore this tired pre-globalization argument you will realize that nothing good will come out of anything regarding this situation.
Suppliers from many different tiers will essentially loose their contracts from worldwide automakers and will never be made up again. The business from just domestic automakers will not be able to sustain many of them.
I don’t have to explain what this does to Japan’s economy.
This is exactly why we saved Chrysler and GM, to ensure that this very situation wouldn’t happen here.
“And in any case, once the pipeline starts to fill, it will take a month again for parts coming out at the other end.”
I’ve heard several times that the parts shortages stopping production are often just a few items per car. If so, couldn’t those parts be air freighted while the containers sail?
It’s always a weight/value matter. High value, low weight stuff such as electronics is routinely air-freighted. OTOH, you really do not want to air-freight brake calipers. Shipping production quantities of engines or transmissions by air would quickly bankrupt a company.
It also may affect assemby. Some parts have to be installed before others just for physics sake. QC would be kind of hard to implement. Logistics. Tools required. Well, you get the idea.
What do you guys think of the used Japanese market?
I’m looking for a used Honda Fit, and am afraid this will inflate the prices even more.
Just look at what has happened to average transaction prices for new Prii last month.
They went from near to below invoice to about $1000 over MSRP.
This will happen to all cars if they wear a Japanese brand. Cars like the Fit, especially because they are imports will probably have some kind of increase in transaction cost. Now is the time to buy if you really want it.
Maybe a Hecho en Mexico Versa will sustain less damage in terms of price increase, but who knows they some of those parts come from.
Damn globalization.
This may lead in the short-term to sourcing strategies that include dual sources for critical components. Then after a while, everyone will forget about this lesson and get back to “fill up the capacity of a single supplier for volume reductions!” Anyone interested isending their kids to college for a profession that will become increasingly more in demand for talent over the next 20 years, look no further than Supply Chain Management, Purchasing, and Logistics.
Welcome to the global economy and the risk associated with predictably unpredictable Black Swan events.
Chrysler cancelled overtime this week at plants in Canada and Mexico to conserve parts from Japan. Its Brampton, Ontario, plant make Dodge Challenger, Dodge Charger and Chrysler 300 vehicles. The Toluca, Mexico, plant makes its Dodge Journey and the Fiat 500, which Chrysler is now introducing to the U.S. market.
Meanwhile, Toyota Motor Manufacturing Canada said it is inevitable that it will be forced to temporarily shut down its plants because of parts shortages from Japan.