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Akio Toyoda’s statement, as factory stoppages expand and worries deepen

Home / News / Japan Earthquake & Tsunami 2011 aftermath / Akio Toyoda’s statement, as factory stoppages expand and worries deepen

With, as of this writing, the official death toll from northeast Japan’s earthquakes and tsunami standing at 1900 (and fears it may climb as high as 10,000 in Miyagi province alone), it is obvious that it remains to be seen how far the ramifications and repercussions from this natural disaster will extend.

Today the Toyota USA Newsroom posted its third update on its original earthquake and tsunami news release as featured in our Friday 11 March Kaizen Factor story. Although essentially rehashing what we reported then and on Saturday 12 March, one vital new piece of information emerges: the production shutdown at all Toyota facilities slated for Monday 14 March is now extended until Wednesday 16 March. Here’s the text in full:

Updated Toyota Statement Regarding Earthquake and Tsunami in Japan

Toyota’s associates and team members in North America extend our heartfelt sympathy and deepest condolences to the people of Japan, our colleagues and their families.

Our utmost concern has been the safety of all Toyota Motor Corporation (TMC) team members and team members at our partner companies in the Tohoku region. We continue to place priority on supporting the relief efforts in the regions affected and ensuring that our team members, the employees at subsidiary vehicle manufacturers and at our suppliers—and all their respective family members—are safe.

TMC has established a company-wide emergency task force to continually assess the situation and take initial measures.

There have been no reported injuries at Toyota operations, including the Tokyo head office, the Higashifuji facility, Tochigi office, Yamanashi office, Toyota Motor Tohoku facilities and at TMC subsidiary vehicle manufacturers.

While TMC plants were able to restart production on 3/11, plants that stopped production are Toyota subsidiary plants that produce parts and vehicles, including:
* Toyota Motor Hokkaido Plant
* Toyota Motor Tohoku Plant
* Central Motor Corporation Miyagi Plant, which also produces the Yaris model.
* Kanto Auto Works Iwate Plant, which also produces the Scion xB and Scion xD.
Employees at these facilities were evacuated to safe areas.

We are now conducting a detailed survey of each plant to determine the extent of any damage. We are also currently assessing the situation at our suppliers, dealers and the impact on North American import vehicles.

As we are committed to ensuring the safety of our team members and their families, Toyota has decided to suspend production at all TMC plants, as well as all subsidiary vehicle-manufacturing plants on Monday, March 14th through Wednesday, March 16th.

Toyota’s number one priority is to support our team members at TMC, our partner companies, suppliers and dealers through this situation. On behalf of the company globally, TMC is moving to donate 300 million yen (approximately $3.75 million) for relief and recovery efforts in communities affected by the Tohoku Earthquake and is also considering the provision of goods and services as needed.

Also, Toyota president Akio Toyoda offered the following brief but heartfelt statement:

Akio Toyoda Statement: To All Those Affected by the Tohoku Earthquake

I offer my prayers to all those who lost their lives in the March 11 Tohoku Earthquake and its ensuing aftermath, as well as my sympathy to the survivors and their families.

Not only is the struck region one of our production bases, those directly hit and vastly affected include our dealers, suppliers and numerous other partners.

With life the number-one priority, we want to do all we can to contribute to the relief efforts.

Determined to provide hope for not only those suffering and forced to undergo extreme hardships, but also for the region overall, we will do our utmost toward the realization of recovery.

Akio Toyoda, President
Toyota Motor Corporation

It was hardly surprising that on Monday 14 March the Tokyo stock market fell significantly, nor that automaker stock losses outpaced the market’s overall drop of 6.2%. It was mildly unexpected, however, that Toyota’s loss of 7.9% (per a report by Canadian Press‘ Pamela Sampson) was the second-lowest, percentage-wise, among all Japanese carmakers, undercut only by Honda’s 6.5% decline. In contrast, Isuzu Motors Ltd. (in which Toyota holds a minority 5.9% stake) fell by 9.2%, Nissan dropped 9.5% and Mitsubishi Motors Corp. plummeted by 11.8%.

Always among our favorite and most knowledgeable sources of information, Automotive News’ Asia editor Hans Greimel’s latest piece is a story titled Japan automakers extend shutdowns as quake impact (which also appears on AN‘s sister publication AutoWeek). It includes the following notable passages:

Japan’s seven big automakers are extending nationwide production shutdowns amid growing concern about supply chain interruptions, power shortages and export difficulties following the massive earthquake and tsunami that hammered northern Japan, killing thousands.

Toyota…will lose output of roughly 40,000 vehicles over the three-day period (from Monday 14 March until Wednesday 16 March), spokesman Dion Corbett said.

Carmakers are halting production – even at plants not affected by Friday’s 8.9-magnitude monster quake – partly to give workers time to regroup with families. Thousands of people in northern Japan are still unaccounted for, as authorities predict a death toll exceeding 10,000.

But the country’s supply chain has also been slammed – with automakers still unable to make contact with some parts makers in the quake zone three days after Friday’s disaster. There is also concern about export shipments being interrupted by tsunami damage to the nation’s ports.

U.S. production may even be hit if plants there can’t get parts normally imported from Japan.

Honda has 113 suppliers in the quake zone and still can’t get in touch with 44 of them.

“We cannot complete a car, even if one or two parts are missing,” Honda spokesman Keitaro Yamamoto said. “So it’s better that we stop production altogether.”

Even Mazda Motor Corp., whose base of operations lies in far-western Japan where the quake was barely felt, said it was suspending the Monday night shifts at its two assembly plants and asking workers at both shifts to stay home Tuesday and Wednesday.

“We are expecting shortages of certain parts, such as steel plates and brake parts, to name a few,” spokesman Kotaro Minagawa said.

Fuji Heavy Industries Ltd., maker of Subaru brand cars, was among those extending Monday’s shutdown through Wednesday. That move affects U.S. exports of the Forester and Impreza.

Even U.S. output at Japanese-brand plants may be hurt if parts exports are pinched.

“Overseas production could be affected as well if shutdowns become prolonged, as core components such as engines and transmissions are supplied to overseas vehicle factories from Japan,” predicted Kohei Takahashi, an auto analyst with J.P. Morgan Securities in Tokyo.

“Given the 20,000 to 30,000 parts that go into making an automobile, and the difficulty of procuring even basic materials, we do not foresee a return to normal production schedules anytime soon,” he wrote in a report, adding he saw little lingering long-term industry damage.

The looming memory is the supply chain breakdown triggered by an earthquake in Japan’s northern prefecture of Niigata in 2007. That quake damaged plants at just a handful of key suppliers, most notably the piston ring maker Riken. The ensuing parts shortage set back nationwide auto output by 125,000 units, notes Japan’s Nikkan Jidosha industry newspaper.

Even if the cars can be built, sending them overseas is another hurdle.

Toyota said it was still gathering information on how its exports might be affected.

Meanwhile, rolling power shutdowns throughout eastern Japan have been implemented by the local utility, Tokyo Electric Power Co., to save electricity. Power output capacity has been slashed because many generation plants – including nuclear – were damaged in the disaster.

Engineers are racing to prevent meltdowns in at least two reactors at one nuclear plant.

The planned blackouts have crimped business operations as well as interrupted train services, making it difficult for many employees to report to work. Reported gasoline shortages, triggered by damaged refineries, have further contributed to a logistical and transportation snarl.

Meanwhile, automakers are also concerned about additional damage to plants from strong aftershocks, which continued rocking the region through Monday evening, with new earthquakes cropping up in different regions of the country.

A Bloomberg article by Terje Langeland includes brief updates on Toyota’s other affiliates, noting that Daihatsu may lose production of 9600 units as it closes factories through Wednesday 16 March; truckmaker Hino planning a stoppage until at least Wednesday 16 March as well; while rival (but also partially Toyota-owned, as noted earlier) truckmaker Isuzu said it would stop output at its two Japan plants until Friday 18 March. In a somewhat rare note of cautious optimism, the article also cites Nomura analyst Jiyun Konomi as predicting that Japan’s automakers may be able to make up for lost output by using excess production capacity at unaffected plants and running assembly lines on overtime and during holidays.

A Reuters report outlines damage to the various Japanese ports, while another of our go-to sources during this crisis, The Truth About Cars‘ Overseas Editor Bertel Schmitt outlines the expected disruptive effect of power shortages and spot outages for months to come. On the latter subject, much attention has been directed towards the meltdown threat at the Fukushima Dai-ichi complex of six electricity-generating nuclear reactors. We are far from experts on the subject, and instead bring you links to both the latest, somewhat pessimistic report from the Associated Press‘ Eric Talmadge and Mari Yamaguchi and a counterpoint that implicitly rebuts the former as somewhat alarmist via an unexpected source:‘s Japan-based Adam Zillin, who brings us both an extended report on nuclear powerplants citing Massachusetts Institute of Technology (MIT) research scientist Dr. Josef Oehmen and a far briefer bilingual English-Japanese summary of its main points.

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