Parts crisis hits Japan

Japan's major automakers are trying to find alternative parts suppliers to replace those affected by the colossal earthquake that forced most of the country's car production to a halt, writes Yuri Kageyama.

Analysts say production is likely to resume within the next few weeks, bouncing back from the March 11 quake and tsunami which killed more than 6,000 people. Once parts arrive, automakers will be able to make up for much of the lost production in coming months, they say.

What's likely to hurt in the longer run are logistical difficulties caused by damaged roads and limits on electricity use. Power stations have suffered damage including several nuclear power reactors that are beyond recovery - and leaking radiation in a still unfolding crisis.

Toyota, maker of the Prius hybrid and Lexus luxury models, stopped production at auto assembly plants throughout Japan until yesterday. Among Japan's automakers, it was least affected because most of its suppliers are located near the company's Nagoya headquarters, southwest of Tokyo, far from the disaster's epicentre in the northeast.

Meanwhile, Honda said its production halt at auto assembly plants in Japan had to be extended by three days until today.

Earlier last week, Nissan and Mitsubishi restarted some plants using their stocks of parts, which will continue only as long as inventory lasts.

The potential long term damage to the industry is 'all guesswork', according to Koji Endo, an analyst with Advanced Research Japan. He said: "Automakers are scrambling to find other suppliers, including overseas ones, to replace those disabled by the 9.0-magnitude earthquake."

North-eastern Japan is home mostly to tertiary parts-makers - the tiny machine shops that make parts for secondary and other suppliers. Parts-makers higher up in the supply chain will be able to make those parts instead, Mr Endo said.

He estimates the loss for Toyota at about 6.5 billion yen ($81 million) or 13,000 vehicles at day, but Toyota can make up for that by boosting production later on.

Goldman Sachs said in a report this week that the damage to automakers will be short term, and parts-makers have recovered quickly from previous earthquakes.

Nissan's engine plant in northeastern Japan suffered damage, and a transmission plant was damaged from another quake last Tuesday in Shizuoka, southwest of Tokyo. That could prove more serious as suppliers for engines and transmissions are harder to replace.

Spokesman Mitsuru Yonekawa said damage was being assessed and it was unclear when production will resume.

Nissan said that checks began this week for traces of radioactive material in vehicles to avoid spreading contamination. Fears about radiation leaks have been growing because of the crisis at the Fukushima Dai-ichi nuclear power plant, which is spreading low levels of radiation in northeastern Japan, forcing nearby areas to be evacuated.

Toyota began production for repair and replacement parts last Thursday, and started production of parts for overseas production, including knockdown car assembly, on Monday.