December 3, 2023

Toyota Sees Slow Return to Normal

TOKYO — It will take Toyota Motor until the end of the year to return to predisaster production levels, the president of the Japanese automaker said Friday, underscoring the seriousness of supply chain disruptions caused by the destructive quake and tsunami last month.

Though Toyota’s 17 plants in Japan have escaped the disaster relatively unscathed, factory lines are working at only half volume here and at 40 percent overseas, as vital suppliers in Japan’s worst-hit areas struggle to restart operations.

At a briefing for reporters in Tokyo, Akio Toyoda, the automaker’s president and chief executive, said he expected to ramp up production gradually in Japan starting in July, as more parts makers came back on line. Toyota will raise production at its overseas factories a month later, in August, to allow for those parts to arrive from Japan, Mr. Toyoda said.

Production at home and overseas will return to predisaster levels at all factory lines and across all vehicle models by November or December, Mr. Toyoda said.

“The damage has been so wide-spread in this unprecedented calamity that its economic effect is being felt throughout Japan and in every industry,” Mr. Toyoda said. He added that the automaker had immediately dispatched employees to help recovery work at some of its most vital parts makers.

The severe disruptions come as a painful blow to Toyota just as it had appeared set to shake off the effects of a sharp slowdown in sales in the aftermath of the global economic crisis, as well as a scandal over its handling of a spate of recalls. The reduced production also highlights a downside to Toyota’s insistence on making almost half of its cars in Japan and shipping them to overseas markets. Also, its celebrated just-in-time production system, which reduces parts inventories to a minimum, may have made the disruptions worse.

The automaker estimates that it still faces shortages of about 150 critical parts, down from about 500 immediately following the March 11 quake.

Atsushi Niimi, executive vice president in charge of production, said that Toyota had switched suppliers in some cases to speed up the recovery.

He said it had been a bitter revelation to Toyota that its cars, even those produced overseas, still relied so heavily on Japanese parts.

“We need to procure more parts overseas, and we also urge our suppliers to make more forays outside Japan,” Mr. Niimi said. He added that Toyota would diversify its supplier base over all to make its supply chain more resilient. “It’s something we don’t want to think about, but it is something we cannot avoid if we are to continue to do business in a quake-prone country,” he said.

Mr. Toyoda, the company chief, said continuing aftershocks made the outlook uncertain. He declined to comment on the effect of the disruptions on the company’s earnings.

“We just had an aftershock yesterday,” he said. “As these continue, the rapid recovery we’ve seen can come undone. The future is impossible to predict.”

Another concern is the severe energy shortage brought about by the crisis at the Fukushima Daiichi Nuclear Power Station, 225 kilometers, or 140 miles, north of Tokyo, as well as damage to other power plants in the region.

To avert a power supply crunch, the Japanese government initially instructed companies to reduce their energy use by as much as 25 percent. But frantic efforts by utilities to increase power generation at plants outside the worst-hit zones, as well as a public drive to conserve energy, has eased the energy shortfall, allowing the government to lower its directive to 15 percent.

Mr. Niimi, the executive vice president in charge of production, said that Toyota was discussing energy-saving measures with other automakers in Japan, such as shutting production lines during the week and running them on weekends, when more electricity is available.

Still, Mr. Toyoda said, the company was committed to keeping production — and jobs — in Japan.

“Above all, we all love Japan,” he said. “As we face a national crisis, each company must do its part.”

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