The Assembly Line Is Rolling Again, Tenuously, at Honda in Japan
Moshe Komata for The New York Times
Honda Motor's workers assembled a body of the company's latest vehicles on the assembly line at the Sayama factory in Saitama Prefecture.
By ANDREW POLLACK
Published: April 18, 2011
Add to Portfolio
Moshe Komata for The New York Times
Honda has moved workers from a damaged factory to a satellite office in its plant in Sayama.
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.
The crisis has made the carmakers realize just how vulnerable their supply systems are. While the they have tight relationships with direct suppliers, they might not know all the companies that supply parts to them — or the even smaller suppliers further back in the chain.
One big focus of concern is a supplier called Renesas Electronics. It holds a 40 percent worldwide share — and bigger still in Japan — of the market for automobile microcontrollers. Those computers-on-chips command almost every system in a car, like rolling up a window or revving up the engine.
Renesas, whose semiconductor factory in Hitachinaka was heavily damaged by the earthquake, says it hopes to resume production in July, and perhaps sooner. It could take several weeks to hit meaningful production levels, analysts say, so shortages could last into August.
It is not easy for auto companies to switch suppliers of microcontrollers, since the chips are customized to some extent.
Other suppliers might stay closed even longer because they are in the evacuation zone around the Fukushima Daiichi nuclear power plant. These include a rubber component maker, Fujikura Rubber, and Namie Japan Brake, which makes pads for disk brakes.
Honda officials say their priority is to help suppliers get back on line, not to look for new ones. Mr. Nemoto, the spokesman, paraphrased remarks made previously by the company’s president, Takanobu Ito, that abandoning the existing suppliers would effectively kill them.
Automakers and some parts suppliers, for instance, sent hundreds of people to the crippled Renesas factory to help restore water and natural gas connections and to repair equipment.
Honda is also showing some loyalty to the 5,000 workers at the Saitama factory, keeping them working full time at full salary despite the limited production.
The factory is still operating the usual two eight-hour shifts per day. But only four hours of each shift are devoted to actual production. The other four hours are occupied by busywork like tidying up.
The Saitama plant, which opened in 1964, had already suffered from a big drop in production as exports dried up in the financial crisis. Only 344,000 vehicles were produced here in 2009, down from 556,000 in 2007. And some of the vehicles once exported to the United States from the factory, like the CR-V, the Odyssey and some Accord and Acura models, are now made mainly in North America.
Saitama also has the handicap of being served by the Tokyo Electric Power Company, which owns the crippled Fukushima Daiichi nuclear plant and may have lost as much as 20 percent of its company’s overall generating capacity because of its various plants affected by the natural disaster.
Because of that, Saitama could face severe restrictions on electricity use this summer. So Honda is considering shifting some production to its other major Japanese factory, its Suzuka plant, which is near Nagoya and served by a different power company.
If that happens, employees here at Saitama would have even less work to do.
“The most painful thing for a factory,” said Mr. Katayama, the Saitama plant manager, “is being unable to manufacture.”
No comments:
Post a Comment