"Because the automobile industry has such a broad base, its effect on others is widely felt. Believing that the sooner the better, our entire company has been working to bring production back to normal."
Toyota Motor Corporation (TMC) announced today that all vehicle models will not be back in normal production until November or December 2011. The ongoing manufacturing and financial crisis, the result of the earthquake and tsunami in Japan in early March, reveals just how fragile the supply chain is for global platforms that use single sourcing and “just in time” deliveries or parts and components.
It is also an affirmation of the wisdom of the U.S. taxpayer financed bailouts of General Motors and Chrysler. At the time these were under debate in 2008 and 2009 ideologues scoffed at the assertion that to let those companies fail would also cause other North American auto companies – U.S. and offshore owned – to fail since suppliers in common would be wiped out taking the whole auto industry down.
Toyota said that after an analysis of its suppliers affected by the earthquake that global production will begin to increase as soon as July in Japan, where it is now at 50%, and August in North America, at 40% now, due to the time required to ship parts from Japan to overseas plants.
(See Toyota Cuts May Auto Production in North America)
“To all the customers who made the decision to buy a vehicle made by us, I sincerely apologize for the enormous delay in delivery,” said TMC President Akio Toyoda at a press conference in Japan today. The business impact on Toyota will be dire, possibly sending it back into losses after it just started to become profitable again after the 2008 collapse of the global financial markets.
Toyota said it plans to continue procuring parts from the same suppliers, but it will consider substitute parts from other suppliers – a risky proposition since Toyota is already under attack for well published quality and safety problems. TMC said there are approximately 150 parts affecting new-vehicle production, mainly electronic, rubber and paint-related. However, replacement parts for sales service and repair are available since Toyota needs the profits generated by the sale of these high margin items.
TMC also said it is continuing to do all it can to minimize the impact on employment. In North America, it was announced earlier this week that there are no plans for layoffs at manufacturing plants.
“Our entire company is committed to solving the problems before us,” Toyoda said, “so that we can achieve production recovery even one day sooner.”
