Supply-hit Nissan mulls partial shift of engine production to U.S.

by Dee-ann Durbin

The Associated Press

Nissan Motor Co. said Thursday it is considering moving some engine production from Japan to the U.S. because of earthquake damage to its plant in Iwaki, Fukushima Prefecture, another illustration of how seriously the Tohoku disaster has upended the global network of auto supplies.

Car factories could face serious shortages of Japanese parts by the middle of next month unless the domestic auto industry can quickly restart its shuttered production following the devastating earthquake and tsunami, experts said.

As stockpiles of parts from Japan run low in the coming weeks, some North American plants are bracing for shutdowns. Toyota Motor Corp. has warned workers it may idle operations.

“The impact of the supply shortage will begin to be felt more intensely by global automakers by the middle of next month,” Paul Newton, auto analyst with research firm IHS Automotive, said Thursday.

Supply disruptions in Japan generally are felt by U.S manufacturers three to four weeks later, depending on a company’s stockpiles, Newton said. That’s because of the time it takes to ship parts across the globe. So shortages caused by the March 11 disaster could hit the U.S. by mid-April.

Toyota said late Wednesday that it expects to halt production at some of its North American factories, but doesn’t know when or for how long.

The impact should be limited, Toyota said, because most parts used in its North American factories come from a network of 500 suppliers based in the region. It continues to get part shipments from Japan that were en route before the magnitude 9.0 quake struck the Tohoku region.

The company has already suspended overtime and Saturday shifts in North America, where it has 13 plants that build 70 percent of the cars and trucks it sells in the U.S.

Nissan said Thursday that its U.S. plants will operate at full production through April 1, and may even pick up some business due to damage at its Iwaki engine plant. Nissan said it is studying whether to have its Dechard, Tenn., engine plant supply six-cylinder engines to Japan.

Honda Motor Co., Mazda Motor Co. and Mitsubishi Motor Corp. said Thursday that North American production is continuing normally. Subaru, a division of Fuji Heavy Industries Ltd., also said North American production is continuing, although it has suspended overtime. Fuji Heavy resumed making parts for its foreign operations Wednesday.

In February, North American production reached 1.06 million vehicles, 15 percent higher than the same month a year earlier. But near-term production is beginning to be hurt by parts shortages from Japan, said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. In addition to scaled back production at Toyota and Subaru, General Motors Corp. has idled manufacturing at its Shreveport, La., pickup plant.

“With the uncertainty remaining high about the full extent of the parts supply situation, North American production could be impacted in the weeks to come,” said Schuster.

His forecast for 2011 production remains at 12.9 million units, however, and he expects any production losses will be made up later in the year.

In Japan, Toyota plans to resume production of the Prius and two Lexus hybrids — the HS250h and CT200h — on Monday. The Prius is made at the Tsutsumi factory in Aichi Prefecture, while the Lexus models are produced in Kyushu, areas outside the disaster zone.

As for the company’s nine other domestic factories, Toyota has only said shutdowns will last at least until Saturday. It will have lost production of about 140,000 vehicles by then.

Nissan said it resumed production of its Leaf electric car, but warned that rolling blackouts by Tokyo Electric Power Co. could potentially hamper production at its assembly plant in Oppama, Kanagawa Prefecture, where the Leaf is made, and its battery plants in Zama, also in Kanagawa.

Rival Honda said Thursday the suspension of car production at its factories in Saitama and Suzuka, Mie Prefecture, will be extended to April 3. It had previously said production was halted until Sunday.

The company is restarting production of motorcycles at its factory in Kumamoto on Monday.