Leading chip supplier Toyota to cut production due to Japan earthquake

The window of a car dealership is shattered following a strong earthquake in Koriyama, Fukushima prefecture, Japan in this photo taken by Kyodo on March 17, 2022.

Kyōdo| via Reuters

DETROIT – A major earthquake this week in Japan is causing additional problems for the already constrained global automotive supply chain, which continues to manage problems caused by the coronavirus pandemic and Russia’s continued invasion of Ukraine. .

As companies monitor and assess the potential residual impacts of Wednesday’s 7.4 magnitude earthquake on their supply chains, the automakers most immediately affected are Toyota Motor and Renesas Electronics, a major supplier of semi-automatic chips. drivers for the automotive industry.

Research firm LMC Automotive expects the earthquake to drive vehicle production down this year to between 25,000 and 35,000 cars and trucks, adding to expectations already lowered due to continued shortages. semiconductor chips and the war in Ukraine.

“This is just another layer on top of an already fragile system where we are seeing heavy pressure on the manufacturing side of the business,” said Jeff Schuster, LMC president for the Americas. “It’s definitely something the industry didn’t need at this point.”

Toyota announced on Friday that it would suspend operations at more than half of its factories across Japan. The world’s largest automaker by volume said 18 production lines at 11 plants (out of 28 lines at 14 plants) will be down for three days next week due to supply problems caused by the earthquake.

“Due to parts shortages resulting from suppliers affected by the earthquakes, additional adjustments will be made to production operations at some factories in Japan as follows,” Toyota said in a statement.

The closures were announced a day after Toyota cut production by 150,000 units from April to June due to growing supply chain uncertainty.

For more than a year now, the global auto industry has faced a global shortage of semiconductor chips caused by factory shutdowns at the start of the coronavirus pandemic. Chips are the most notable issue among global supply chain issues caused by the pandemic, rising costs, inflation and Russia’s invasion of Ukraine.

“The bottom line for this is that this is another impact on an already constrained system,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility, formerly IHS Markit. “It seems like a short-term impact…but that’s just not what the industry has to deal with right now.”

Renesas, which is believed to make nearly a third of the microcontroller chips used in cars globally, operates three factories near the earthquake’s epicenter in northeast Japan, the company said.

The Tokyo-based semiconductor supplier said it was trying to restart factories and bring them back to pre-earthquake production volumes by Wednesday, including one as early as Sunday.

Renesas’ importance in the global automotive semiconductor supply chain was highlighted last year following a fire at one of the factories that caused automakers such as Ford Motor to significantly reduce production at their facilities, many of them in North America.

Ford teams are “monitoring the situation very closely and are actively working to determine what impact, if any, this may have on our operations,” a company spokesperson said Friday. General Motors issued a similar statement.

Japan’s smallest automaker Subaru said on Friday it would suspend production on Friday and Monday at two auto assembly plants and an engine and transmission plant due to the earthquake.

“Subaru Corporation will temporarily suspend production at its automotive manufacturing plants due to interruptions in the supply of certain parts, as the operations of the factories of suppliers of these parts have been affected by the earthquake,” Subaru said in a statement. a statement.

Spokespersons for Japanese automakers Honda Motor and Nissan Motor said there was little to no impact on their operations from the quake. A Honda spokesperson said the company suspended a night shift at a Japanese plant when the earthquake struck.

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