The Automotive Parts Manufacturers’ Association is anticipating at least some disruption of parts to Japanese automakers’ manufacturing operations in Canada and the US.
TORONTO: Japanese automakers don’t anticipate any Canadian layoffs as a result of the earthquake and tsunami in the country’s northern region, despite production cuts at some Ontario plants.
Toyota, Honda and Nissan have halted production in Japan for most of the week as they assess damage to plants, ports and roads, but it’s still too early to tell how supply lines to their North American operations will be affected.
The Automotive Parts Manufacturers’ Association (APMA) is conducting an analysis of the potential impact, but in advance of its completion, Steve Rodgers, the Toronto-based trade group’s president, anticipates there will be some disruption to parts supplies.
“The most troubling areas at first pass would be electronics components coming from Japan, as these often come by air freight,” he said.
The second major issue will be infrastructure. Rodgers acknowledged that even if parts plants were not damaged during the disaster, getting the parts to a shipping port in Japan may be a challenge.
“However, we also know the ports in the south are generally fine and this is where the majority of the parts get shipped from,” he said. “ Some of the impact will not be felt for four to six weeks as the stuff on the water can take that long to get here.”
Rodgers said there is some potential for resourcing parts but the APMA believes it will be minimal, noting the process for recertification can be quite lengthy. “[Also] OEMs and large tier ones have alternate supply arrangements that they can go to.”
Toyota and Nissan each make 70% (Honda 80%) of their vehicles for the US market in North America.
Toyota has suspended one hour of daily overtime at its plants in North America, including Ontario, to conserve parts and give the company’s head office time to confirm the status of its supply chain.
Pat Clement, assistant manager of external affairs at Toyota’s Canadian plants, said it will take some time to assess the supplier situation. However, at least one Japanese auto parts maker plans to resume production for North American customers on Monday, while the revised reopening date for Toyota’s plants in Japan is next Tuesday.
The automaker’s two plants in Woodstock and Cambridge, Ont. employ about 6,500 people.
Honda Canada said most of the company’s cars and parts sold in North America are made on the continent, so it anticipates the crisis in Japan will not lead to production cuts in Canada.
The company employs approximately 4,600 people at two plants in Alliston, Ont. where it builds the Honda Civic sedan, Acura luxury vehicles, Honda Ridgeline trucks, and engines.
A TD Economics report on the quake and tsunami’s economic impact observes autos and auto-related parts are a leading import from Japan and the sector is located in the disaster area. This could temper auto production in Canada at Japanese company plants, leading to reduced inventories on dealer lots. However, the report notes auto sales in Canada are unlikely to be dramatically affected, “as non-Japanese auto producers could meet demand.”
Files from The Canadian Press