Japan‘s major auto makers extended halts in domestic production at least through Wednesday as they continue to grapple with supply shortages, damaged facilities and rolling power outages wrought by Friday’s earthquake and tsunami.
Meanwhile, a growing list of companies in a range of other industries, from consumer electronics to steelmakers and retail-store operators, were suspending parts of their operations affected by the earthquake while preparing to cope with the planned power outages in a sign that the road to reconstruction and recovery from the quake could be long and shaky.
The government-mandated power cuts are aimed at preventing a widespread power outage. The action comes after Friday’s earthquake and tsunami knocked out two nuclear facilities operated by Tokyo Electric Power Co., leaving the utility that serves all of the Tokyo area with a 25% power capacity shortfall.
Toyota Motor Corp. said Monday that it is suspending production at all domestic factories through Wednesday as the auto maker tries to adjust to the logistics dislocation caused by the disaster.
A spokesperson for the world’s biggest auto maker by sales said the suspension, which covers all Toyota group companies, will result in a production loss of 40,000 vehicles.
Toyota had already suspended production at all of its 12 domestic plants Monday.
A report from IHS Automotive said about 45% of Toyota’s global production has been affected by the quake and tsunami. IHS said there are reports of possible work stoppages at a Toyota transmission facility and a specialized forging plant that makes battery-pack parts as well as other plants that make electronic components. Damage to suppliers is “extremely worrying,” the report said.
Earl Stewart, who owns a Toyota dealership in North Palm Beach, Fla., said he is concerned about the supply of Prius hybrids, which are made in Japan. The recent surge in gasoline prices has driven demand for the car in the U.S., and he has no Priuses left on his lot to sell.
“The Prius is a huge issue for us,” he said. “What I am worried about is how they are going to get them from the plant to the ports, and what shape are the ports in?”
Honda Motor Co., which had also suspended production Monday, said it would extend the manufacturing halt at all its domestic plants through Sunday, resulting in an output loss of 16,600 vehicles.
Nissan Motor Co. said that it will suspend two damaged plants located in Tochigi and Fukushima, closer to the central quake-hit area, until Friday and another four plants near the Tokyo area and Fukuoka, south of Japan, until Wednesday.
Suzuki Motor Corp. said Monday that it will suspend production at its domestic plants on Tuesday and Wednesday as it will stop accepting parts deliveries to allow suppliers to ensure the safety of employees.
The vehicle maker, based in Shizuoka, central Japan, had halted operations Monday at its six factories. Suzuki’s India unit Maruti Suzuki India Ltd. said Monday it is still evaluating the impact of the production suspension in Japan on its auto imports from the country.
Auto parts purchased from Japan account for 25% of Maruti’s overall imports.
Mazda Motor Corp. said that it will idle all four of its domestic plants in western Japan until Wednesday to ensure the safety of employees at suppliers and also because it won’t be able to procure sufficient parts.
Isuzu Motor Ltd. said it will suspend its two domestic plants throughout this week, and truck maker Hino Motors Ltd. will shut down their plants through Wednesday.
Meanwhile, Mitsubishi Motors Corp., which has suspended operations for Monday and Tuesday, said it will operate its three domestic auto plants on Wednesday and will assess in the meantime whether the production lines will able to run Thursday. Mitsubishi Motors said it will be able to procure sufficient parts to operate all three plants on Wednesday.
Nomura Securities analyst Masataka Kunugi Moto estimated that Toyota’s operating profit in the year ending March 2012 could take a hit of 40 billion yen ($490 million), or 3%, if production is halved through the end of April. Nissan’s operating profit could be down by 50 billion yen, or 8%, while Honda could see its operating profit shed 30 billion yen, or 3.5% next year.
Nomura Securities estimated that a 25% cut in power supply by TEPCO across its service areas in the eastern Japan region could depress production in the manufacturing sector by 2.5%.
Even before the quake struck, Japanese auto makers were making plans to increase vehicle manufacturing overseas, pushed by burgeoning demand in emerging markets and in a bid to deal with the effects of a stubbornly strong yen that had made their products pricey in their export markets. Now, some analysts expect the latest developments will accelerate this move.
“As they have already planned to produce more vehicles overseas, [the impact of the quake] will probably speed the move,” Tatsuya Mizuno, an analyst at Mizuno Credit Advisory, said.
In other industries, Hitachi Ltd. Monday said operations are currently suspended at its six manufacturing facilities in the quake-struck areas, which make various products, including home appliances, auto parts, elevators and power-generation systems.
The Japanese electronics conglomerate is still trying to assess the damage at the facilities and the company doesn’t yet know when operations can resume, a Hitachi spokesman said.
Heavy machinery maker IHI Corp. said two of its plants in the quake areas, which manufacture aircraft engine parts, gas turbine and aerospace-related parts, have been damaged and have no prospect for a recovery.
JFE Holdings Inc. said Monday that it has reduced production to minimum levels at its two steel plants in prefectures south and north of Tokyo, to help reduce power consumption amid concerns over power shortages in quake-struck Japan.
JFE doesn’t yet know how long it will continue the output cuts at the Kawasaki and Chiba steel plants, a company spokesman said.
Another Japanese steelmaker, Nippon Steel Corp., also temporarily suspended production at its Tokyo refinery to help cut power consumption.
Operation has since resumed, but the company said it will continue to carefully monitor the situation.
Seven & i Holdings Co. said all of its Ito-Yokado supermarkets are open but will suspend operations during the power shortage.
Isetan Mitsukoshi Holdings Ltd. said it closed four department stores located in the power outage areas.
Odakyu Electric Railway Co., which provides railway services between Tokyo and Kanagawa prefecture in west of Tokyo, has said it will halt operation of its limited express Romancecar train service for the time being. It will also seek to save electricity by suspending elevator, escalator and blackouts in its train stations. The company said an inability to maintain sufficient electric power may lead to a cutback in services.