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Toyota, Honda assessing quake’s impact on operations

The earthquake and tsunami that devastated Japan on Friday has prompted Toyota and Honda to close plants in Japan, but it’s too early to assess how their North American operations will be affected.


March 14, 2011
by PLANT STAFF/CANADIAN PRESS

TORONTO: The 8.9-magnitude earthquake followed by a tsunami that devastated Japan on Friday has prompted Toyota and Honda, both with manufacturing operations in Ontario, and other automotive OEMs to suspend domestic production at some of their plants, but it’s too early to assess how their North American plants and suppliers will be affected.

An update on the Honda Canada website said two employees from Canadian operations are in Japan but they were not injured.

It said plants in Tochigi, Saitama, Hamamatsu and Suzuka had stopped production for at least today, and the Automobile R&D Center in Tochigi has stopped operations until further notice. However, the Kumamoto Factory in southern Japan continues to operate.

“At this time, there is no immediate impact to Honda’s operations in North America, though some interruption to the supply chain may be possible,” it said in a statement.

Toyota said in an update that it’s halting production at all plants in Japan (including subsidiary vehicle manufacturers) from today until March 16. On March 13 it conducted a detailed survey of each plant to determine the extent of any damage and it’s assessing suppliers, dealers and the impact on North American import vehicles.

Analysts say Canada will feel the economic impact of the disaster in Japan, but the effects should be short lived, says a Canadian Press report.

They suggest Canada could lose out on short-term trade as Japan focuses on recovering from the quake, the most powerful in the area in nearly 1,200 years.

Japan imported about $9.2 billion of Canadian goods last year, including wheat, lumber, coal and minerals used in manufacturing.

But with several Japanese factories shut down following the disaster, the focus will be on recovery rather than producing cars or other goods like electronics, predicts Tim Richardson, former head of the now-defunct Canada-Japan Trade Council and now a professor at the University of Toronto.

He said Japanese business executives “will be told in e-mails from head office to be very concerned about expenditures. The Japanese companies will not be producing their manufactured products that require the constant imports.”

The fallout from the quake and the seven-metre-tall wave that swept over parts of Japan, will also likely affect Canadian banks, software and telecommunications companies that work with the exporters, he said.

But Richardson said Canada has a good reputation in the lumber and construction industries and exports will bounce back as Japan rebuilds.

Sherry Cooper, chief economist at BMO Financial Group, said the disaster an ocean away might draw more foreign investment into Canada, reducing the impact of the lower trade figures.

“Canada will continue to be seen as a safe haven. We are truly an oasis of calm in a world that is battered by both natural disasters and financial disasters. On a relative basis we continue to be performing very well,” she said.

She added that Japan buys a fair amount of Canadian products, but the number is small compared to the US, where Canada sells 80% of its exports.

Both Cooper and Richardson cautioned that the extent of the economic impact in Canada won’t be clear for days.