Japan’s Earthquake and Tsunami Halt Auto Production

Information on what you can do to help can be found at the bottom of the article.

By Chris Haak

It goes without saying that in the devastating earthquake and follow-up tsunami that hit Japan last Friday, the largest cost will be a human one.  Thousands of people have been killed, and the death toll is going to continue to rise in the coming days and weeks as cleanup and recovery operations progress.

There’s also an economic cost to the disaster.  Early estimates are that reconstruction costs might exceed $35 billion USD, to say nothing of the diversion of resources away from attempting to grow Japan’s economy and overcome a 20-year period of stagnant economic growth and immense public debt.  The auto industry in Japan is not immune from these forces, and in fact has already been significantly impacted by the disaster, with more to come.

Japan’s seven largest automakers – Toyota, Nissan, Honda, Suzuki, Mazda, Mitsubishi, and Fuji Heavy Industries (Subaru) have all suspended vehicle production.  Though only Toyota actually has a major manufacturing presence in the quake zone, parts suppliers for nearly all automakers have at least some facilities in the affected areas.  If a single part for a car is not on hand at production time, the car can’t be built (with limited exceptions).  You can’t assemble a car without brakes, or suspension arms, or even a radio.

The supply chain is in bad shape.  Days after the disaster hit, apparently automakers are still unable to make any contact with some of their quake-zone suppliers.  Automotive News reported that Honda has 113 suppliers in the quake zone and still can’t make contact with 44 of them, three days after Friday’s earthquake.

For now, most automakers are suspending production through Wednesday, with plans to reassess at that point.  Not only are there supply-chain issues, but they also need to give their workers time to deal with family issues and to reconnect with loved ones.

The auto-industry impact of the quake will not be limited to Japan, either.  There were some 2,300 Nissan and Infiniti vehicles ready for shipment sitting alongside the port when the tsunami hit, and those cars are now ruined.  US-bound Honda Fits are affected by the Honda shutdown, as are US-bound Acura RLs (we may be OK on the latter point).  Even transplant production in the US, where Japanese automakers build cars in here, could be impacted if a particular part is sourced from Japan, or specifically in the earthquake zone.

It is likely to be quite a while before Japanese production returns to normal levels.  Toyota, for example, was already forecasting a 4% production drop for 2011, but losing over 13,000 units of Toyota production per day will reduce actual 2011 output even further.  With several of Japan’s nuclear power plants offline or reducing their output, there also may not be enough energy to power energy-intensive automobile manufacturing plants.

However, more important than any car news is information on how to help survivors and victims in Japan.  Courtesy of Microsoft, here are several ways that anyone can help:

• The American Red Cross is accepting donations for Japan Earthquake and Pacific Tsunami relief. Individuals can also text ‘REDCROSS’ to 90999 to donate $10 from their mobile phone.
• Save the Children is responding to the needs of children and families affected by the earthquake and its aftermath. Donations can be made to Save the Children’s Japan Earthquake Tsunami Children in Emergency Fund.
• International Medical Corps is responding to the health needs of the disaster’s victims.
• World Vision has announced mobilization in response to the earthquake and tsunami.
• NetHope, a collaboration of the world’s leading humanitarian response organizations is mobilizing efforts to support aid agencies responding in the region.
• Mercy Corps is working with its partner Charity Peace Winds Japan to accept donations.
• AidMatrix is working with its partners to connect resources and material for various response efforts. Needs for In-Kind and Transportation donations are being assessed and will be posted to the AidMatrix network as they become available.

Please do what you can to help, and keep the people of Japan in your thoughts and prayers.