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TOYOTA
Japan car makers gear up for parts crisis
TOYOTA Motor Corp and Honda Motor Co, Japan's two largest car makers, may modify their so-called 'just-in-time' manufacturing system to avoid possible supplier bankruptcies disrupting production.
General Motors Corp and Chrysler LLC are battling to restructure after winning US$13.4 billion in emergency federal loans to keep them operating through March. Detroit's woes could lead to a 'supplier shock,' crippling United States production at Japanese and other foreign car makers, according to the Center for Automotive Research. 'We continue contingency planning even after the bailout,' Mike Goss, a spokesman for Toyota's North American manufacturing unit in Kentucky.
'We hope the loans provided to Detroit will also help to stabilize suppliers, but the very slow market remains a concern for all.'
The Japanese company may work with more parts makers and increase inventories to mitigate the effects of a collapse among its US suppliers, at least half of whom also work for Detroit auto makers, Goss said.
US vehicle sales at a 26-year low have forced GM and Chrysler to seek government aid and left as many as a third of North American component-makers at risk of bankruptcy.
'Parts makers may have escaped bankruptcy filings for the next few months, but a year from now, the risk is definitely still there,' said Takeshi Miyao, a supply chain analyst.
Plunging demand in the US, the world's biggest auto market, contributed to Toyota on December 22 forecasting its first operating loss since 1938. That was the same year the car maker fully adopted the 'just-in-time' model, according to its Website. Under the system, companies avoid stocking inventories, preferring to take delivery of components as they are needed, to cut expenses.
Any emergency measure would be costly, analysts say. Increasing stockpiles would mean renting warehouse space to store parts and supplementing components from overseas would increase shipping costs.
'We're considering many scenarios for possible outcomes,' said Yasuko Matsuura, of Honda Motor Co. Measures may include increasing inventories and doubling sources to buy parts, Matsuura said.
'We're very concerned,' said Fred Standish, a spokesman for Nissan Motor Co's North American unit in Franklin, Tennessee. 'If one company goes into severe economic distress, it affects many others across the supply chain.' About 60 percent of Nissan's 350 suppliers in the US also supply GM, Chrysler and Ford.
General Motors Corp and Chrysler LLC are battling to restructure after winning US$13.4 billion in emergency federal loans to keep them operating through March. Detroit's woes could lead to a 'supplier shock,' crippling United States production at Japanese and other foreign car makers, according to the Center for Automotive Research. 'We continue contingency planning even after the bailout,' Mike Goss, a spokesman for Toyota's North American manufacturing unit in Kentucky.
'We hope the loans provided to Detroit will also help to stabilize suppliers, but the very slow market remains a concern for all.'
The Japanese company may work with more parts makers and increase inventories to mitigate the effects of a collapse among its US suppliers, at least half of whom also work for Detroit auto makers, Goss said.
US vehicle sales at a 26-year low have forced GM and Chrysler to seek government aid and left as many as a third of North American component-makers at risk of bankruptcy.
'Parts makers may have escaped bankruptcy filings for the next few months, but a year from now, the risk is definitely still there,' said Takeshi Miyao, a supply chain analyst.
Plunging demand in the US, the world's biggest auto market, contributed to Toyota on December 22 forecasting its first operating loss since 1938. That was the same year the car maker fully adopted the 'just-in-time' model, according to its Website. Under the system, companies avoid stocking inventories, preferring to take delivery of components as they are needed, to cut expenses.
Any emergency measure would be costly, analysts say. Increasing stockpiles would mean renting warehouse space to store parts and supplementing components from overseas would increase shipping costs.
'We're considering many scenarios for possible outcomes,' said Yasuko Matsuura, of Honda Motor Co. Measures may include increasing inventories and doubling sources to buy parts, Matsuura said.
'We're very concerned,' said Fred Standish, a spokesman for Nissan Motor Co's North American unit in Franklin, Tennessee. 'If one company goes into severe economic distress, it affects many others across the supply chain.' About 60 percent of Nissan's 350 suppliers in the US also supply GM, Chrysler and Ford.
