Japanese Earthquake + 2008 Auto Crisis = Perfect Storm For Parts Shortages
As Japan continues to grapple with a tremendous natural disaster, the global auto industry is beginning to comprehend the impact that Japan’s crisis will have on production. Nearly every automaker on the planet – regardless of where they headquarter themselves – is beginning to learn of parts shortages caused by the quake in Japan. Some examples include:
- Chevy Colorado/GMC Canyon – Stopped production due to a (rumored) transmission shortage
- Ford F150 – Asked dealers to stop ordering black or red trucks because they’re likely to run out of a special paint pigment sourced from Japan (full story from Detroit News)
- Honda – Nearly Honda’s entire product line is effected in one way or another. They may be the hardest hit of all Japanese manufacturers.
- Hybrids of all kinds – Most hybrid vehicles use batteries, transmissions, controllers, or important electronics that are built in Japan
- Nissan – Some V6 models will be in short supply as one of Nissan’s most important engine plants has been heavily damaged
- Subaru – The Forester and Impreza will both likely be in short supply this summer.
- Toyota – As we detailed previously, the Prius, Scion xD, and Yaris will be the hardest hit, and most of the Lexus line will suffer as well.
According to Automotive News, there will also be a general shortage of microchips and circuit-board level components for the next few months in all industries as Japanese electronics manufacturers get back on their feet. While these shortages are likely to be temporary, it’s probable that the North American automotive market won’t grow quite as fast as it could have this year.
As most media outlets focus on Japan’s crisis and it’s impact on the global automotive supply chain, it’s important to recognize that GM and Chrysler are partially responsible for the current shortages (at least indirectly).
How GM and Chrysler Helped Cause A Worldwide Auto Parts Shortage
While a vehicle usually only has one manufacturer on the label, the truth is that hundreds of manufacturers contribute parts. Dana, Leer, Delphi, Aisin, and hundreds of other companies large and small build almost all of the parts on a modern vehicle. For the most part, car manufacturers specialize in four tasks:
- Overall vehicle design, which is in then turned over to suppliers to ‘spec out’
- Engine and transmission design and manufacture
- Vehicle assembly (taking all the parts from the suppliers + the power train and putting it all together)
- Selling the vehicles
That’s it. The days of GM or Ford or Toyota making their own axles or radios or frames are long gone. Aside from engines and tranmissions, your typical Brand X vehicle is made with a lot of the same parts that are used in the Brand Y alternative. Suppliers do almost all the manufacturing…which brings us to the auto crisis of 2008.
When GM and Chrysler first started having trouble in 2008, they stopped paying or slow-payed many of their suppliers to preserve cash flow. While the big companies were able to survive a lack of cash flow, many of the small ones started to die off. By the time the bail out was official in mid-2009, hundreds of auto parts manufacturers had gone bankrupt alongside “old GM” and Chrysler.
Obviously, if these suppliers were still in business, they might be able to produce parts to help meet the demand during this shortage.
Am I blaming GM and Chrysler for the current shortage? No. But GM and Chrysler – and their inability to survive without government assistance – have caused a lot of problems for a lot of people, some of which are only being recognized right now. Next time you or a friend is at the car lot, think about the company you’re supporting and what they’ve done to help or hurt US manufacturing.
Filed Under: Auto News