Japanese automakers halted production at assembly plants in areas hit by Friday's 8.9-magnitude earthquake. One Honda worker died after being crushed by a collapsing wall.

More than 30 other people were injured when walls and parts of a ceiling crumbled at a Honda Motor Co. research facility in northeastern Tochigi prefecture, the company said.

Production at two Honda plants was halted, but resumed shortly afterward at one, it said.

Toyota Motor Corp., the world's biggest automaker, shut down two auto assembly plants, in Iwate and Miyagi prefectures. There were no immediate reports of injuries among its workers, spokeswoman Monika Saito said. Parts makers were also shut down, she said.

Nissan Motor Co. halted production at five of its plants in northeastern Japan and in the Yokohama area near Tokyo. It said two workers were slightly injured at its Tochigi plant and its technical centre in Kanagawa prefecture, near Tokyo.

The quake, the biggest in magnitude in modern Japanese history, left hundreds of people dead or missing, and triggered a tsunami that swept over towns, farms and an airport.

Toyota Motor Corp. (7203), the world’s largest carmaker, may lose output of at least 40,000 vehicles after Japan’s strongest earthquake damaged factories and crippled nuclear power plants, causing electricity shortages.

Toyota closed 12 plants in the nation through March 16, Shiori Hashimoto, a spokeswoman for the Toyota City, Japan-based company, said by phone. The manufacturer’s profit will be cut by 6 billion yen ($72 million) for each day of lost operations in Japan, while Nissan Motor Co. and Honda Motor Co. may each lose 2 billion yen a day, Goldman Sachs Group Inc. estimated.

Sony Corp. (6758) and Toshiba Corp. (6502) also shut plants following the March 11 earthquake and tsunami, which police said may have killed more than 10,000 people. The disaster may trim 0.3 percent from Japan’s economy as power outages cut industrial production, Nomura Holdings Inc. estimated in a report.

“We don’t know how long it will take for manufacturers to return to normal operations, with the current situation at the nuclear power plants,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. “If they can resume output, they can sell as the U.S. economy is signaling a recovery.”
Nissan, Honda

Nissan Motor Co., Japan’s second-largest carmaker, suspended operations at four plants until March 16 and at two other plants until March 18, the Yokohama-based company said today in a statement.

The automaker earlier said 2,300 new vehicles were damaged by tsunami surges in the wake of the 8.9-magnitude earthquake, the strongest ever recorded in Japan. Nissan doesn’t have an estimate of how much production may be lost, said Yuichi Nakagawa, a spokesman for the company.

Honda, the nation’s third-largest carmaker, will halt output through March 20, reducing output by an estimated 16,600 cars and trucks and 2,000 two-wheelers, said Tomoko Takamori, a spokeswoman for the Tokyo-based company.

Tokyo Electric Power Co., battling a possible meltdown at a nuclear reactor 220 kilometers (135 miles) north of Tokyo, planned rolling blackouts to conserve power. A second hydrogen explosion rocked the plant in Fukushima prefecture today, and the situation continues to be a concern, Prime Minister Naoto Kan said.
‘Panic Selling’

“This earthquake affected a wide area, and it’s likely that the economic impact will exceed the 20 trillion yen in damage sustained during the Kobe earthquake” of 1995, Economic and Fiscal Policy Minister Kaoru Yosano said.

Toyota fell 7.9 percent, the most since December 2008, to close at 3,310 yen in Tokyo trading, while Japan’s benchmark Nikkei 225 Stock Average dropped 6.2 percent to the lowest level since November. Nissan plunged 9.5 percent, and Honda declined 6.5 percent.

“It’s panic selling,” said Toshikazu Horiuchi, a market analyst at Cosmo Securities Co. in Tokyo. “No one knows the complete picture yet on how big the damage will be from the earthquake.”

Daihatsu Motor Co., 51 percent owned by Toyota, may lose production of 9,600 units as it closes factories through March 16, said Fumihiko Kondo, a spokesman for the Osaka-based carmaker.
Mitsubishi, Mazda

Mitsubishi Motors Corp. (7211) plans to resume production at its three Japan factories March 16 after a two-day halt, Yuki Murata, a spokesman for the Tokyo-based carmaker, said today.

“We don’t know how many cars we are going to lose” from the stoppage, Murata said. Domestic production totaled 660,104 vehicles in 2010, he said.

Mazda Motor Corp. (7261) will extend a production halt at four Japan plants until at least the night of March 16 due to a parts shortage, Ken Haruki, a spokesman for the Hiroshima-based carmaker, said by phone today. The company isn’t disclosing how much output it will lose, he said.

Hino Motors Ltd. (7205) said it planned a stoppage until at least March 16, and Hiromichi Suwa, a spokesman, said the company was trying to calculate the potential loss. Rival truckmaker Isuzu Motors Ltd. (7202) said it would stop output at its two Japan plants until March 18.

Japan’s automakers may be able to make up for lost output by using excess production capacity at unaffected plants and running assembly lines on overtime and during holidays, Nomura analyst Jiyun Konomi said in a report dated yesterday.

Tech Supply

“Capacity utilization at Japanese automakers’ plants in Japan is low,” Konomi wrote. “There does not appear to have been major damage to building or machinery and equipment” at Toyota and Nissan’s factories in the affected areas, he wrote.

The main risk to Japan’s manufacturing comes from the earthquake’s impact on infrastructure, rather than from direct damage to factories, Bhavtosh Vajpayee, head of technology research at CLSA Asia-Pacific Markets in Hong Kong, said in a report dated yesterday. The quake may trigger a supply shortage for electronic components including batteries and memory chips, Vajpayee said in the report.

“Closure of ports, damage to roads and electric power outages can do serious damage to the tech supply chain,” he wrote, adding that Japan is “critical” to the global supply in several electronics sectors.

Japan makes 44 percent of the world’s audiovisual equipment, 40 percent of electronic components, 19 percent of semiconductors and about 20 percent of all technology products, Vajpayee wrote.
Sony, Toshiba

Sony, Japan’s biggest exporter of consumer electronics, halted operations at 10 factories and two research centers today because of power outages and damages, said Mami Imada, a spokeswoman for the Tokyo-based company. The Tokyo-based company won’t disclose production capacity of the factories that were closed today, said Shinji Obana, a Sony spokesman. The company’s shares fell 9.1 percent in Tokyo trading.

Toshiba, which makes products ranging from memory chips to nuclear power plants, halted five factories due to power outages and closed one plant because of damage from the earthquake, the Tokyo-based manufacturer said.

Toshiba makes between 25 percent and 35 percent of the world’s NAND chips, used in smartphones and tablets, the CLSA report said. The company plunged 16 percent in Tokyo trading.

Canon Inc. (7751), the world’s largest maker of cameras, said it would suspend operations at eight production and development facilities in northern Japan. Canon shares fell 5.9 percent.

Panasonic Corp. (6752) stopped operations at factories making digital cameras, audio equipment, electronic materials and devices, said Akira Kadota, a spokesman for the Osaka-based company. The shares dropped 8.1 percent.

NEW YORK (CNNMoney) -- Toyota's U.S. manufacturing arm is preparing for a possible shutdown because of parts shortages from Japan, a Toyota spokesman said.

Word has gone out to all 13 of Toyota's factories in the United States, Canada and Mexico. This does not mean that the plants will stop working, Toyota spokesman Mike Goss said, but that they should be ready in case the need arises.

"We expect some kind of interruptions," he said.

Although Nissan CEO Carlos Ghosn recently affirmed that the Japanese automaker has no intention to shift vehicle production out of Japan in the wake of the earthquake and tsunami, the automaker may be looking to produce some aspects of its vehicles in outside markets instead.

It may seem at first glance to be a near technicality to suggest Nissan has no intention to shift vehicle production out of Japan, and then to immediately suggest that the automaker might shift engine production to the U.S., and then import said engines back to Japan – but there is a clear distinction between the two avenues.

In the age of a truly global economy, it is not uncommon at all for many parts used in production in one country to be sourced from another country entirely, but when it comes time for some consumers to pick a car, the only production location that seems to matter is the final assembly point for the vehicle itself. For Nissan, only one major plant is expected to remain offline for some time, with potential for long-term downtime given its reliance on a nuclear powerplant that is currently on the verge of meltdown.

“It will take some time at Iwaki to recover,” said Ghosn to Bloomberg.

Because of those circumstances, Nissan is said to be considering production of engines for some of its luxury Infiniti models, among other vehicles, at its engine plant located in Tennessee. Nissan would then export the engines from the U.S. to Japan, where the vehicles would then be assembled and eventually shipped off to their destination markets, including back to the U.S.

Although Nissan has not yet made a final decision on the matter, it would seem almost impossible not to move forward with the plan, especially if the situation regarding the nuclear powerplant does not improve, soon.

In a move that could foreshadow an industry trend, Mazda Motor Corp. today said it suspended orders of Japan-built vehicles for its dealers in the U.S.

The company long known for its “Zoom-Zoom” tag line said it is stopping the orders because it plans to shut down production in Japan on Monday after briefly reopening its plants. The suspension will affect the May allocation of vehicles for dealers here, and the car maker said it is unclear when it will begin taking orders again.

Japanese car companies closed numerous vehicle and parts plants in Japan after the March 11 earthquake and subsequent tsunami damaged their factories, routed some suppliers and disrupted transportation and electrical service.

Mazda’s suspension affects most of its models including the venerable MX-5 Miata convertible, the popular Mazda3 compact and the award-winning CX-9 crossover. Unlike larger Japanese rivals including Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., Mazda doesn’t have vast, long-standing assembly operations in North America. Indeed, the only Mazda vehicles built here are the Mazda6 sedan and Tribute SUV made in partnership with Ford Motor Co.

Mazda spokesman Jay Amestoy says the company’s supply of vehicles in the U.S. is in “decent” shape because dealers happen to be carrying larger-than-average inventories. He also said the shortages of everything from steel to electronics are affecting every car maker.

TO: All Honda and Acura Automobile Dealers

FROM: John Mendel

RE: Production Update

DATE: March 25, 2011

As promised, I am updating you with new information regarding our production plans as it becomes available. Yesterday, we updated you on the status of our Japanese automobile factories and concerns related to the ability of Japanese parts suppliers to adequately provide some of the components needed for automobile production.

Earlier today, our North American automobile factories informed their manufacturing associates that normal production would continue through at least April 1. However, due to concerns related to the supply of parts, there is a likelihood that those factories will experience some temporary interruptions in vehicle production after that date, until the parts supply issues are resolved.

We realize this raises many specific questions. However, due to the fluidity of this situation, we are not able to provide any more information at this time. We are currently analyzing what the impact will be after April 1 and will communicate further details as soon as they become available.

Once again, we would like to express our appreciation for your continued patience and understanding. We will continue to keep you updated on the overall situation.

The parts supply problem for Japanese cars has extended from new cars to the one you may be driving: Toyota is rationing repair parts for its dealers in the U.S.


CAPTIONBy Justin Sullivan, Getty Images
The company has told dealers that "approximately 233 part numbers, out of over 300,000 active part numbers, have been placed on controlled allocation." Toyota asked dealers not to stock up on those parts, but to order only "what is critically needed to support customer emergency" repairs. The shortage is being caused by the shutdown of suppliers due to Japan's earthquake and tsumani. The move is being made to prevent dealers for ordering excess inventory out of fears that shortages could develop on critical parts that they use a lot, like an engine drive belt.

Toyota won't say which exact parts are involved in the recall, but spokesman Brian Lyons confirms to Drive On that parts needed to make repairs on Toyota's many highly publicized recalls are not involved.

The company also has told workers to expect "some production interruptions" at its 13 North American vehicle assembly and engine plants due to problems obtaining parts from Japan.

The announcements were the latest indication that problems may get worse before they get better for Japanese brands in the U.S. due the ongoing crisis in Japan:

-- Drive On reported earlier that starting tomorrow Honda "will begin to adjust production levels" at most of its North American factories, cutting hours at some plants in half.

-- Subaru plans to cut shifts in half on Wednesday, to four hours, at its Lafayette, Ind., plant to conserve parts.

-- Nissan says parts inventories are OK for now, but it will have to reassess North American production on Friday.

"Teams are working 24/7 to make a detailed assessment of the situation. A car is about 30,000 parts and we have more than 60 cars in the (global) portfolio, so you can imagine the size of the puzzle," says Carlos Tavares, head of Nissan operations in the Americas.

Toyota said it can't predict yet how deeply it might have to cut production at its 13 North American engine and vehicle plants and which plants will be most affected.

"We have no idea how bad this really is. The one thing I'm absolutely certain of is that everything is completely uncertain," says Rebecca Lindland, veteran auto analyst at consultants IHS Automotive.

The shortages have hurt Detroit automakers, too. General Motors temporarily closed a pickup factory at Shreveport, La., and a related engine line in Buffalo, N.Y., for lack of undisclosed parts from Japan.

Ford Motor and Chrysler Group told dealers to expect shortages of vehicles in certain paint colors because they use a pigments that come only from a supplier in Japan.

European automakers also use some Japan-only components.

Volkswagen Group CEO Martin Winterkorn said he couldn't forecast production schedules after next week because of possible shortages.

Adding to industrywide vulnerability is cost-cutting maneuver called "single sourcing." An automaker will place its entire order for a component with one supplier, trading maximum volume for a rock-bottom price.

In such cases, it doesn't matter if the finished vehicles are made in North America, only that a key part, often electronic, comes from Japan.

Honda Motor Co. says it will reduce production at its plants in the U.S. and Canada starting today because of shortages of parts from Japan following the earthquake and tsunami there. The car maker says slowdowns will vary from one factory to the next. According to some reports output will drop by as much as 50% in some cases, but Honda says it hasn’t confirmed that figure.

Even though more than 80% of Honda and Acura vehicles sold in the U.S. are built in North America, mostly from North American parts, the company’s latest action shows how the absence of even one part can stop an assembly line.

This is the kind of report many expect to hear from the majority of car makers shortly because most rely on Japan for critical parts, some of which are likely to run out soon.

Honda says most of its suppliers in Japan have either resumed production or are ready to restart their operations. But there are a few that haven’t yet recovered, and some of them provide critical parts that Honda cannot quickly get from other sources. The company says it is helping certain suppliers to get their operations going and also “evaluating other possible sources for those parts in the supply chain.”

Honda says it is trying to “minimize the impact on Honda associates, dealers and customers.”

Here’s a list of Honda’s North American plants and the vehicles they build:

Marysville, Ohio: Honda Accord, Honda Accord Coupe, Acura TL, Acura RDX.

East Liberty, Ohio: Honda CR-V, Honda Element, Honda Accord Crosstour.

Greensburg, Ind.: Honda Civic Sedan, Honda Civic GX natural gas.

Lincoln, Alabama: Honda Odyssey, Honda Pilot, Honda Ridgeline.

Alliston, Ontario: Honda Civic (Sedan, Coupe, Si) Acura MDX, Acura ZDX, Acura CSX (The CSX is sold only in Canada).

El Salto, Mexico: Honda CR-V.

The company builds the Honda Fit, Insight, CR-Z, Civic Hybrid, Acura TSX and Acura RL in Japan for the North American market. Honda also makes a small percentage of CR-Vs in Japan for the U.S.

As we continue to see each day, the devastating earthquake and resulting tsunami in Japan is continuing to challenge some of the brightest minds working at Nissan. Now that the total depth of the destruction is coming into clearer focus I wanted to provide you with a report on the actions our team is taking to address the company’s business needs in the wake of the disaster.
First, and most importantly, I want each of you to know that we are in a very healthy stock situation for the Nissan brand with visibility of more than 260,000 units in dealer stock, at port or in transit from Japan. This is a much better stock situation than at the same point last year.
From an ordering standpoint, we will follow a normal schedule for May ordering. All customer and dealer vehicle orders will be processed and you will see no interruption in your ability to order vehicles for May.
For the May production, we will allocate 50% of the eligible production volume for each model in CPO regardless of the days of supply. As part of the process, we are going to exclude any un-serialized production currently in your availability, along with any production that was in your availability that was cancelled as a result of the earthquake and that we do not plan to replace. This modified process will more accurately reflect your true availability as we run the allocation cycle for May.
Once we are comfortable that the impact of this crisis is behind us and we have clear visibility of future production schedules, we will revert back to the traditional allocation process for both CPO and PPO. You will be notified when this occurs.
While certain models built in Japan did experience an interrupted manufacturing schedule due to the disaster, most of our Japanese manufacturing plants restarted production today, March 24th – including the Oppama Assembly Plant where the Nissan LEAF is produced. The exception was our Iwaki engine plant not far from the Fukushima Power Plant, but we are investigating the potential for our Decherd, TN engine plant to supply VQ V-6 engines to Japan to replace lost production from Iwaki.
Here in the Americas we have been extremely fortunate as the impact of the crisis has not materially affected our manufacturing operations. Nissan Americas manufacturing operations have been fully operational since the earthquake and we intend to continue to follow a normal production schedule through at least April 1. We intend to continue production beyond April 1 and are working to limit any potential for component shortages. The situation continues to be assessed.
As the situation continues to develop we appreciate your desire for updated information on vehicle availability and impact on your businesses. We will do our best to keep you informed and we appreciate the many on-the-ground communications we are receiving from the field which are helping us to assess the market’s reaction to the crisis.
Thank you for your compassion, your work, and your prayers, as we stand by the people of Japan in their continuing efforts to recover from this disaster.

The No. 3 Japanese automaker warned investors on Tuesday that operating profit could fall as much as 65% this year because it has had to delay the launch in the United States of major models, including its new Fit Shuttle and a new version of its top-selling Civic.

Honda has asked its dealers to continue to pursue December sales with special regional lease and loan rates, a sign that the automaker’s inventory is continuing to grow following production cuts stemming from flooding in Thailand.

“Our product availability is good, our arrivals are good and we will continue to have media presence throughout the month of December,” said Honda’s American sales chief John Mendel in a memo that encouraged dealers to move “full speed ahead” with sales.

Though Honda initially cut North American output by as 50 percent earlier this month due to parts shortages caused by the Thai floods, the automaker has since begun returning production to normal levels. Honda’s inventory climbed from a 33 day supply on October 1 to 37 days on November 1, compared with an industry average of 57 days at that time.

Another memo sent to dealers on November 21 stated that Honda expects December production levels to surpass output during December of 2010, said Honda spokesman Gary Robinson.

“Since this whole Thailand crisis started, our initial position was pretty conservative, but things have turned around quicker than we initially thought,” Robinson said.