Japanese Auto Companies Stop Production After Earthquake

11:04 PM, Jul 18, 2007   |    comments
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The temporary closure of auto parts maker Riken Corp.'s plant at Kashiwazaki city, near the epicenter of Monday's magnitude 6.8 quake, has forced Toyota, Nissan Motor Co., Mitsubishi Motors Corp., Fuji Heavy Industries and Suzuki Motor Corp. to scale back production. Toyota will stop production lines at a dozen factories centered in central Aichi prefecture Thursday afternoon and all day Friday, said Toyota spokesman Paul Nolasco. The company will assess the situation at Riken, supplier of key transmission and engine parts, before deciding whether to resume production on Monday, he said. Nolasco said it was "too early to tell" whether the halt would affect deliveries to domestic and overseas dealers. Tom Libby, J.D. Power and Associates' senior director of industry analysis, said customers shouldn't notice the shutdown because Toyota likely has sufficient inventory to cover a few days of lost production. "I don't think their inventory is that tight. I think they'll be able to adjust and probably make up for it afterward," Libby said. He said he was unsure of the impact if the shutdown lasts beyond the end of the week. For now, it should have minimal impact on U.S. customers because Toyota has sufficient inventory on hand, said Mona Richard, a company spokeswoman in Detroit. Toyota, which makes the top-selling Camry and other models in America, currently has no plans to increase U.S. production. The parts plant that caused the shutdown in Japan supplies only Japanese plants, Richard said. It would take several weeks for the shutdown to affect Toyota's U.S. sales and become an opportunity for Ford Motor Co., General Motors Corp., and DaimlerChrysler AG's Chrysler unit, to retake some market share lost to Toyota, said Michael Robinet, vice president of global forecast services for CSM Worldwide, an auto industry consulting company based in Northville. "If it was an extended situation, then other manufacturers could look at it. But this is just a temporary blip," Robinet said. Nissan Motor Co. said Wednesdays it was also halting some production lines at two factories on the main island of Honshu for at least two days starting Friday because of supply delays from Riken. But Nissan expected to quickly make up for any delays, said spokesman Yuichi Nakagawa. Fuji Heavy, maker of Subaru cars, said earlier Wednesday it would stop production of its five mini car models because it is uncertain when it will receive its next shipment of piston rings from Riken. Mitsubishi Motors also said it was stopping assembly at three plants later in the week for several days because it is unable to procure enough parts from Riken. The problems at Riken were also threatening production at Honda Motor Co., the automaker's president told public broadcaster NHK. "If things don't get better today, we're going to stop, too," Takeo Fukui said. "We are just able to hold out until the weekend," he said. In addition, Suzuki Motor Corp. will suspend operations at five plants for three days from Thursday, Kyodo News agency reported. Riken, Japan's No.1 supplier of engine piston rings, said in a statement it was rushing to fix the damage at its Kashiwazaki plant and hoped to get the factory online as soon as possible. Monday's quake had damaged warehouses and knocked over equipment including metal molds, electrical tools and precision measuring devices at Riken's Kashiwazaki factory, the statement said. Riken said it hoped to replace damaged equipment in the next few days but needed to conduct a detailed inspection of the plant and a trial run before it reopened. The company has another factory just outside Tokyo, which was not damaged in the quake. Fears of production delays at Japan's automakers drove share prices down in Tokyo on Wednesday. Fuji Heavy shares fell 1.82 percent to 592 yen on the Tokyo Stock Exchange. Honda shares fell 0.66 percent to 4,490 yen. Toyota lost 1.32 percent to 7,460 yen, and Nissan Motor Co. lost 0.53 percent to 1,313 yen. Monday's quake, which killed ten people and caused a slew of problems at a nuclear power plant, has wreaked havoc on other companies with factories in the region. Fuji Xerox Co. said Tuesday it had halted a printer plant damaged in the quake.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

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