Toyota braces for slowdown in North American output

The supply-chain disruptions from the March 11 Japanese earthquake are likely to force Toyota Motor Corp. to cut production at its North American plants, the company told workers and retailers this afternoon.

The automaker warned workers in the United States and Canada that supplies of parts from Japan are running thin and would cause some interruptions in vehicle production.

"Our supply line has reached a point where it is clear we will incur some non-production time," said a memo that was circulated to employees at Toyota's North American vehicle assembly and engine plants. "The amount of non-production is still uncertain."

The memo was shared with Toyota's U.S. retailers.

"As of this time," said the factory memo, "we have an ample supply of most products, our ships continue to deliver vehicles to North America, we have reopened our parts plants in Japan and we are doing all we can to ensure our dealers have products available for customers."

Mike Goss, spokesman for Toyota Motor Engineering & Manufacturing North America Inc. in Erlanger, Ky., said that the memo was meant only to alert Toyota's employees that work stoppages are now likely in the current situation – not that any are planned.

He said Toyota doesn't know when they might occur, at which plant or for how long.

"We continue to assess suppliers, and we continue to run normally without overtime," he said.

On some Toyota models built in North America, Japan-sourced parts can represent 10 to 15 percent of all content, Goss said, adding that the automaker is particularly concerned about supplies of electronic components and rubber.

Toyota has already eliminated overtime throughout its North American manufacturing operations to preserve parts stockpiles.

Global problems

Honda Motor Co., meanwhile, said some of its biggest suppliers are still struggling to recover.

As of Tuesday, "about 10 of those suppliers have let us know that they will be more than a week from getting up to speed," American Honda spokesman Jeffrey Smith said. "They are experiencing significant delays."

Honda hasn't indicated that part shortages will slow assembly lines outside Japan.

The 9.0-magnitude earthquake and the devastating tsunami that followed it have hobbled industry of all kinds across Japan and resulted in widespread loss of life. Severe damage to a critical nuclear power plant in Fukushima has complicated the disaster by puncturing the industrial power grid and causing fears of radiation contamination.

Not only to do Japanese auto plants in North America and Europe rely on varying levels of components made in Japan, but many non-Japanese automakers also import from Japan. Last week, General Motors said it was halting production of pickups in Shreveport, La., due to shortages of Japanese-sourced parts.

Additionally, even non-Japanese suppliers frequently produce parts that require sub-components made in Japan.

Toyota builds many of its biggest-selling models at plants in Kentucky, Indiana, Texas and Ontario as well as most of its engines for North American vehicles.