A Toyota dealership after the quake in Japan

Disruptions in supply chain after quake delay launch of new car models

Supply chain disruptions in Japan have forced at least one global automaker to delay the launch of two new models.

Toyota is delaying the launch in Japan of two new additions to the Prius line-up, a wagon and a minivan, due to production disruptions from this month's devastating earthquake.

The world's biggest automaker has suspended production at all of its 12 domestic assembly plants and has estimated a production loss of 140,000 vehicles until then.

The automaker is just one of dozens, if not hundreds, of Japanese manufacturers facing disruptions to their supply chains as a result of the quake, the subsequent tsunami and a still-unresolved nuclear threat.

“We still don't know the full extent of what can be done to substitute the affected parts,” Honda spokeswoman Natsuo Asanuma said.

Japanese companies are not only reeling from damage to factories and suppliers in quake-hit northeastern Japan, but are also suffering from fuel shortages nationwide and power outages in the Tokyo area that are affecting production, distribution and the ability of staff to get to work.

Meanwhile, Ford said it had felt no immediate impact or disruption from the earthquake in Japan this month.

“Right now, we have no immediate impact to our production in terms of our supply chain, but clearly you would expect us to be looking at that on a daily basis and we are ... locally, regionally and globally,” Peter Fleet, the president of Ford ASEAN said.

Shares in Toyota fell 1.5 per cent in a Tokyo market down 0.2 per cent.

Suzuki said its three car assembly factories in Japan will remain closed on Thursday and Friday, but they will operate an engine factory on those two days using parts already in inventory. The company said it has yet to decide on plans for next week. Suzuki shares fell 3.1 per cent on Wednesday.

Meanwhile, Panasonic said a factory making printed circuit board materials in Koriyama, northeast Japan, had re-opened. Several other factories in the region remain closed, including one in Fukushima making optical pick-ups and one in Sendai assembling digital cameras and audio equipment. The company declined to give any details about other affected plants. Panasonic shares fell 1.3 per cent on Wednesday.

Japan's airlines and its aerospace industries are also suffering logistical woes.

The crisis in Japan “has firmly shaken up the aerospace supply chain”, according to the research and consulting firm, Frost & Sullivan.

Japan's three first-tier aerospace firms - Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries – “all have major roles in the Boeing 787 programme and all have 787-related production facilities in Nagoya, as do the subcontractors that supply them”, the company said in a report.

“Considering the fact that 35 per cent of the 787 and 20 per cent of the 777 are from Japan, Boeing faces considerable financial risk at the cost of uncertainty in its supply chain.”

Mitsubishi shares fell 1.4 per cent on Wednesday. Kawasaki shares rose 1.2 per cent and Fuji shares fell 6 per cent.

Mitsubishi, Kawasaki and Fuji have said that their plants in Nagoya are unaffected by the earthquake and are not suffering any production disruption, the report added. Boeing has also “categorically” said it has enough inventory to cope with any short-term disruptions its Japanese suppliers may face.

Frost & Sullivan said the catastrophe had raised some big questions about the globalised supply chain and just-in-time manufacturing.

“Aerospace companies have realized that a global supply chain is a double-edged sword, with the losses almost nullifying the gains. This disaster will cause companies to revisit the trade­off between lowest cost and availability.”

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