Toyota had originally stated that new vehicle production would be halted until March 22nd following the major earthquake in the Northeast of the country. However, they have just extended this to the 23rd due to continuing problems with the parts supply chain.
As I posted on Saturday, the beauty of the Japanese production method is also its Achilles Heel: The Just In Time method both ensures that parts and materials are not lying around in production facilities rendering capital dormant while waiting to be used, but on the other hand it makes the entire fragile system hugely vulnerable to disruption in a situation like the one we are experiencing now.
The only way around this is to diversify production outside of Japan. This in practice means that the leadership of these Japanese companies need to be more trusting of their foreign subsidiaries when it comes to producing new models – particularly those involving new technology. Toyota’s Prius and Honda’s Fit both have manufacturing heavily concentrated in Japan itself, so are being most severely effected. Ironically, both of these models are exceptionally popular both in and outside of Japan. As keystones Toyota and Honda’s businesses, they really need to spread production round the globe to protect them from disruptions like this.
Source: Nikkei (Japanese-language)leave a response, trackback from your own site