September 24, 2020

The Assembly Line Is Rolling Again, Tenuously, at Honda in Japan

A little more than a month after the earthquake and tsunami devastated the automobile industry’s supply chains in Japan, Honda — like the other main Japanese car makers — has resumed domestic production.

Slogans or no, however, it is a tenuous triumph.

Honda’s factory here in Sayama, a suburb of Tokyo, was not damaged in the disasters. Neither was its other major plant, about 200 miles southwest of here. But auto production in Japan is at only half the normal level for Honda — as it is for Honda’s bigger rivals, Toyota and Nissan.

That is mainly because many of the 20,000 to 30,000 parts that go into a Japanese car come from the earthquake-stricken region in northeastern Japan, where numerous suppliers were knocked off line. Unless part makers can resume production soon, the auto companies might have to shut down once again.

“We cannot continue for a long time,” said Ko Katayama, the general manager at Honda’s factory here, declining to specify how long production could continue. “Sooner or later, it’s going to run out.”

Honda is now making only 400 to 450 vehicles a day at the factory in Sayama. That is down from the daily pace of 800 to 900 before the earthquake, said Atsushi Nemoto, a company spokesman.

The production shortfalls for Japan’s biggest automakers will crush earnings that had just begun to recover from the global slump caused by the world financial crisis. Over the long term, the Japanese industry could lose global market share — in recent years it has been nearly 30 percent — as overseas customers sample other brands.

Analysts say Japan’s car companies might also resign themselves to making even more of their products offshore. Even before the March disaster, Japan’s top three automakers were producing most of their vehicles outside the country. (In Honda’s case, only about 27 percent of its 3.6 million cars last year were made in Japan.)

Of course, if vital parts remain unavailable, some factories outside Japan are also being affected, though not to the same extent as those in Japan. Honda, for instance, has said it will produce at a reduced rate in North America at least through May 6.

Noriyuki Matsushima, automobile analyst at Citigroup, estimates that global production by Japanese automakers will decline 15 percent in the fiscal year that ends next March. He predicted full Japanese auto production would not resume until October.

“In a worst-case scenario,” he wrote in a recent report, industry operating losses in the first half of the fiscal year would be “the biggest ever, surpassing even those posted at the time of the Lehman Brothers bankruptcy.”

The limited scope of the recovery at the Honda factory here, known as the Saitama plant, was evident on Monday. The company had invited reporters to observe operations that had resumed a week earlier. But access was limited to a single spot near the end of the assembly line, where workers in white company jackets and trousers put finishing touches on Elysion minivans, a model sold only in Japan.

A Honda official acknowledged that if reporters had viewed the entire factory, they would have seen stretches of the assembly line containing no cars.

Toyota, too, which had resumed production in all 17 of its domestic factories as of Monday, is working at only half volume, said Shiori Hashimoto, a spokeswoman. It plans to shut factories again from April 28 through May 9 for an extended version of Japan’s Golden Week — a period containing several national holidays. And even after production resumes at half volume, Ms. Hashimoto said, the situation is uncertain beyond June 3.

In the last week Nissan has also resumed production at all five of its car factories and two engine factories in Japan — including the Iwaki engine plant that was heavily damaged by the earthquake. But Nissan, too, is producing only about half as many vehicles as usual, Mitsuru Yonekawa, a spokesman, said.

Koji Endo, a managing director at Advanced Research Japan, an equity research firm, said automakers “could have a June crisis” when inventories of crucial parts run out. “There is a very good chance they will have to shut down again,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=5e3dafa2df468793d6d4284b718e7f0a

Speak Your Mind