Japanese Earthquake + 2008 Auto Crisis = Perfect Storm For Parts Shortages

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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:

  1. Overall vehicle design, which is in then turned over to suppliers to ‘spec out’
  2. Engine and transmission design and manufacture
  3. Vehicle assembly (taking all the parts from the suppliers + the power train and putting it all together)
  4. 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


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  1. mk says:

    Time to bring back yet another govt. program like ‘cash for clunkers’? Yah right, NOT!
    Question: Has GM and Chrysler paid back the entire amount owed to the federal govt.? If not, why did GM and to a lesser extent Chrysler give bonuses to their big shots already overpaid? Why didn’t the govt. stipulate in their bailout to both of them NO bonuses whatsoever will be given out to anyone until 100% repaid?
    Until 100% paid in full, I will be very skeptical to buy another GM product.
    I also agree to get back on subject, when GM especially around here went below up, it shut down some smaller mfg. jobs here in our area and that is part of the reason unemployment in some areas around me have been up near 12% and in one area over 15% unemployed. Think about it this way if say 10% unemployed, that is 1 in 10 adults unemployed. To me, that is A LOT!

  2. Mickey says:

    If I’m not right GM made a loan to pay for the bailout. Chrysler was given the okay not to payback it’s loan. So that’s a big loss there. I won’t blame the bailout for the loss of manufacturing because it’s the survival of the fittest. That doesn’t mean I will cut them any slack either. MK 5,000 people out of 50,000 is alot of unemployed workers.

  3. mk says:

    And is that entire GM loan repaid – I think not. Thanks GM for putting us Americans deeper in debt. I just frown on the commercials stating ‘chevy runs deep’. Deep in debt! When the Janesville WI GM plant (Janesville being about 50,000 people) closed its doors in 2008 right before I think the GM bankruptcy, I would say 1 in 10 in that area were affected if not more. A lot of local businesses also shut down because of that plant closing. Can you say ghost town (well almost)?

  4. Dan says:

    It’s easy to be an armchair pundit, but in comparison to “Too Big to Fail”, banks that is, likewise the playing field at financial institutions has been reduced . . . and what about bank profits, bonuses, salaries, . . .??? Although my thoughts are now buy what you want, having personally being displaced three times in the last five years, having worked for US automotive interests, at least the US government took some ownership of Chrysler and GM. Certainly not the case for the banks – remember the “socialist” related arguments against this. Further, at least by rescuing these companies, it helped prevent further worker displacement. Last, in my opinion, the proverbial crap is finally hitting the fan. Outsourcing is nothing new . . . doesn’t anyone remember all of the industrial durables / white goods the US used to make. From my understanding the auto industry is one of relatively few brick and mortar establishement still functioning on US soil. I think we’ll really have something to rant about once the few surviving domestic OEM’s and their respective suppliers begin offshoring.

  5. mk says:

    Just heard on the news today that toyota is increasing very shortly the prices of all their vehicles for the 2011 model year supposedly they decided this well before the Japan crisis. I wonder how much of that is true and why didn’t they increase the prices of all 2011 model year vehicles BEFORE most came out already? I bet the Japan tsunami had a major part in this and Toyota is not telling the truth, agree?

  6. Jason (Admin) says:

    mk – They increased prices $500 on the Tundra, and I don’t think it had anything to do with the earthquake/tsunami. They’re getting killed right now on the Yen-Dollar exchange rate, so they had to do something for all the Japanese-made vehicles. My guess is, when someone said they had to raise the prices on all the made-in-Japan products, someone else said “why don’t we raise ALL the prices” to much applause.

    The other thing to remember is that raising the sticker price by $500 gives you another $500 you can use for incentives. It could be a push for the Tundra.

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