Released April 06, 2011 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--The earthquake and tsunami that rocked Japan on March 11 have had a worldwide impact. The human toll of the disaster has been high, but the effect the devastation is having on manufacturing efforts is only now beginning to truly show.
There are shortages in electronics, causing delays or stoppages in the production of computers, televisions, cell phones and other electronic devices. The automotive sector has seen significant shortages in vehicles and key parts. As a result of the devastation, Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) is predicting it will be forced to temporarily shut down all of its North American manufacturing plants because of shortages in key parts necessary to manufacture its automobiles.
Toyota operates 13 manufacturing plants in North America. While executives at the automaker have stated that the closings of these plants will be likely to occur later this month, no firm date has been set. The length of these closures is also unclear, as the parts situation is fluid, while Toyota frantically seeks alternative suppliers.
Toyota is likely to attempt to stagger the closures, so that all of production is not stopped simultaneously, but no one is sure if the company will be able to accomplish this, as the lack of parts is nearing a critical stage. These closures will affect some 25,000 workers, and while no layoffs are expected to occur, workers will be asked to focus on training, or take vacation time or time off without pay while the automaker gets things sorted out.
Toyota is struggling to restart production in Japan so that it can avert lengthy closures elsewhere. However, rolling blackouts have become commonplace in Japan, and there are significant problems with water and gas shortages as the country continues with its massive cleanup efforts. There is also the problem of the transportation of parts and vehicles once Toyota and the other Japanese automakers can resume consistent production. Much of northern Japan's infrastructure remains in ruins and is not likely to be repaired quickly, which will cause significant problems for the country's automakers as they attempt to get whatever parts and vehicles they can produce to ports for delivery to their overseas operations.
It has been reported that Toyota is losing $200 million each day that it has to delay production of vehicles and parts in Japan. Coming on the heels of the automaker's well-publicized safety problems last year, Toyota is facing a significant crisis, as sales have been off for quite some time. While Toyota is the largest of the Japanese automakers to be affected by the disaster and its aftermath, all Japanese automakers are facing similar problems. As a whole, Japan has seen its daily vehicle output drop 500,000 units per day as a result of the devastation.
While Toyota only gets about 15% of its parts for its operations in North America from Japan, these are critical parts that are installed in virtually every vehicle Toyota assembles. Shortages in vehicles and parts have already taken a toll in North America, with Toyota's U.S. sales declining 6% last month. Dealerships are predicting significant shortages in both vehicles and parts throughout the balance of the spring and most of the summer as the automaker works feverishly to fix these problems. Sales are likely to continue to decline, a situation the other automakers are certain to attempt to take advantage of in the coming months.
Toyota is arguably facing its greatest crisis in the company's long history. Consumers are already leery of Toyota vehicles, thanks to the safety concerns raised in 2010 and with vehicle and parts deliveries in jeopardy of being continuously disrupted, sales are likely to continue to fall, placing the automaker in a significant financial bind. While the automaker is working as hard as it can to get operations back online and delivering vehicles and parts, it has to rely on outside forces to clean up distribution pathways, as well as the utility companies to fix the water, gas and power situation. Until all of these things are set right, Toyota is going to be facing an uphill battle to get its operations back to normal, but the company is certainly giving it their all, hoping for the best.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
There are shortages in electronics, causing delays or stoppages in the production of computers, televisions, cell phones and other electronic devices. The automotive sector has seen significant shortages in vehicles and key parts. As a result of the devastation, Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) is predicting it will be forced to temporarily shut down all of its North American manufacturing plants because of shortages in key parts necessary to manufacture its automobiles.
Toyota operates 13 manufacturing plants in North America. While executives at the automaker have stated that the closings of these plants will be likely to occur later this month, no firm date has been set. The length of these closures is also unclear, as the parts situation is fluid, while Toyota frantically seeks alternative suppliers.
Toyota is likely to attempt to stagger the closures, so that all of production is not stopped simultaneously, but no one is sure if the company will be able to accomplish this, as the lack of parts is nearing a critical stage. These closures will affect some 25,000 workers, and while no layoffs are expected to occur, workers will be asked to focus on training, or take vacation time or time off without pay while the automaker gets things sorted out.
Toyota is struggling to restart production in Japan so that it can avert lengthy closures elsewhere. However, rolling blackouts have become commonplace in Japan, and there are significant problems with water and gas shortages as the country continues with its massive cleanup efforts. There is also the problem of the transportation of parts and vehicles once Toyota and the other Japanese automakers can resume consistent production. Much of northern Japan's infrastructure remains in ruins and is not likely to be repaired quickly, which will cause significant problems for the country's automakers as they attempt to get whatever parts and vehicles they can produce to ports for delivery to their overseas operations.
It has been reported that Toyota is losing $200 million each day that it has to delay production of vehicles and parts in Japan. Coming on the heels of the automaker's well-publicized safety problems last year, Toyota is facing a significant crisis, as sales have been off for quite some time. While Toyota is the largest of the Japanese automakers to be affected by the disaster and its aftermath, all Japanese automakers are facing similar problems. As a whole, Japan has seen its daily vehicle output drop 500,000 units per day as a result of the devastation.
While Toyota only gets about 15% of its parts for its operations in North America from Japan, these are critical parts that are installed in virtually every vehicle Toyota assembles. Shortages in vehicles and parts have already taken a toll in North America, with Toyota's U.S. sales declining 6% last month. Dealerships are predicting significant shortages in both vehicles and parts throughout the balance of the spring and most of the summer as the automaker works feverishly to fix these problems. Sales are likely to continue to decline, a situation the other automakers are certain to attempt to take advantage of in the coming months.
Toyota is arguably facing its greatest crisis in the company's long history. Consumers are already leery of Toyota vehicles, thanks to the safety concerns raised in 2010 and with vehicle and parts deliveries in jeopardy of being continuously disrupted, sales are likely to continue to fall, placing the automaker in a significant financial bind. While the automaker is working as hard as it can to get operations back online and delivering vehicles and parts, it has to rely on outside forces to clean up distribution pathways, as well as the utility companies to fix the water, gas and power situation. Until all of these things are set right, Toyota is going to be facing an uphill battle to get its operations back to normal, but the company is certainly giving it their all, hoping for the best.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
