Toyota to Resume Partial Production in Japan

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Researched by Industrial Info Resources (Sugar Land, Texas)--Ever since the earthquakes and resulting tsunami of March 11, manufacturers in Japan have been struggling to get operations back on track. Rolling blackouts and water and gas shortages have hampered efforts to resume normal operations across the country affecting various manufacturing sectors. One of the hardest-hit has been the automotive sector, a sector that not only produces a number of vehicles in the country, but also manufactures hundreds of parts that are shipped across the world to be installed in all manner of vehicles. Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) has been one of the hardest-hit automakers during this time, as all 18 of the company's plants in Japan have been shut down. However, on Friday, Toyota announced that it would be reopening all of its plants in Japan at half production capacity on April 18.

This restart of operations will be limited. Not only will the plants be operating at a reduced capacity because of ongoing parts shortages, but Toyota will only be operating them from April 18 to April 27, when all the plants will be, once again, shut down from until May 9. In part, this is because of the traditional Golden Week holidays when all operations would be closed anyway, but it is also because of the significant problems with part supplies that are still affecting the automakers.

Toyota was initially facing shortages of about 500 different parts because of the devastation in Japan. This has been reduced to about 150 parts, thanks to the almost herculean efforts by manufacturers in Japan to get operations up and running as rapidly as possible, in spite of the continuing difficulties facing the country. A number of parts plants were totally destroyed in Japan on March 11, while numerous others suffered significant damage. As a result of the earthquakes and tsunami, Toyota has suffered the loss of approximately 260,000 vehicles that should have been assembled during the downtime. When you add in the production losses of other Japanese automakers, the total comes to more than 500,000 vehicles lost in Japan in the last month.

As if the stoppages and shortages were not enough for Toyota to bear--especially as the automaker is still attempting to rebuild its image after last year's devastating image problems that occurred thanks to brake pedal issues--Toyota has also seen its stock drop significantly and is facing a potential downgrading of its credit rating as a result. Toyota is facing months, if not years, of recovery time to get over this disaster. The automaker had finally managed to take firm control of the No. 1 spot in global sales, but has since faced problem after problem, and lost the top position.

Toyota is certainly not the only Japanese automaker to face significant earthquake- and tsunami-related problems. Nissan Motor Company Limited (PINK:NSANY) (Yokohama, Japan) will resume half capacity production in Japan on April 11 at most of its plants. Nissan's parts plant that was hit by the tsunami will not begin limited production until April 18.

Honda Motor Company (NYSE:HMC) (Tokyo, Japan) is facing similar problems. Honda is restarting its plants in Japan at half capacity on April 11. However, all three major Japanese automakers are facing the same long-term supply problems, even if they can get all of their plants up and operating at full capacity sooner rather than later. It is likely to be at least the end of 2011 before automotive operations in Japan are capable of returning to full production.

The aftereffects of the earthquakes and resulting tsunami are far-reaching and cannot be resolved in a rapid fashion. The damage was simply too great to be fixed in a matter of weeks. Recovery is going to be measured in months and, in some cases, possibly years. In the meantime, U.S. and European automakers are attempting to do all they can to take market share away from the Japanese. While the supply issues have affected nearly all the major automakers across the globe, those in other countries are lucky enough to not have to face the cleanup and restoration problems of Japan and have the luxury of seeking local firms to replace those parts that are in high demand but are unable to be produced in Japan any longer. The show must go on and in the cutthroat automotive sector, there is blood in the water and the sharks are circling the Japanese automakers.

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.