Toyota Plants in Japan Could Be Closed for 2 Weeks
The magnitude 6.5 earthquake that struck Japan last week, and the aftershocks that have followed, have resulted in more than 40 deaths and 1,000 injuries. The quake has also played havoc with Toyota Motor Corp.’s (NYSE: TM) just-in-time supply chain.
The quake struck in southern Japan near the city of Kumamoto, site of two of Toyota’s main suppliers. The company has said it will close all 26 of its automobile assembly lines in Japan as a result of the impact on its two suppliers.
Honda Motor Co. Ltd. (NYSE: HMC) plans to keep its motorbike plant in Kumamoto closed until Friday, but it has not announced any closures to its auto assembly lines. Nissan already has resumed operations at a plant in Kyushu, according to a report at The Wall Street Journal.
One of Toyota’s strengths has been its just-in-time manufacturing process. The company maintains very little parts inventory, limiting its overhead costs when operations are normal, but very difficult to overcome when a supplier can’t get parts to the right factory.
According to the Wall Street Journal, experts think the Toyota shutdowns may last for two or more weeks. The company has said there is no impact on vehicle production outside of Japan.
A statement from Toyota’s president Akio Toyoda Monday morning included the following comment: “Although we are still trying to assess the exact impact on our operations, we are aware of issues at suppliers and production facilities, as well as dealerships.”
Toyota’s shares traded down about 0.6% on Monday morning, at $103.07 in a 52-week range of $97.80 to $142.84.