Globalised chaos [effect of post-earthquake and post-tsunami in car manufacturing industries

Abstract

After the earthquake and ensuing tsunami hit the north eastern coast of Japan, carmakers in the region were still struggling to produce cars. One reason is the lack of power caused by the damage caused to the nuclear reactor, but of more worrying long-term concern is the lack of components from an ailing supply chain. But it is not just manufacturers in the region who are struggling with inventory, the backlash is being felt all around the globe;the reasons being intricate interwoven supply chains and globalisation. Suzuki temporarily restarted vehicle production at its Kosai, Iwata, and Sagara plants in Japan, but lack of parts caused them to close again a week later, while Mitsubishi has suspended production at its plant in Okayama prefecture. Toyota is putting all its emphasis on resuming production of three hybrid models but it has postponed the launch of the Prius wagon and minivan hybrid. The company has already extended production shutdowns at all of its assembly plants in Japan. The expected delay in the resumption of deliveries of components by Japanese suppliers is threatening the global supply chain. However, the impact is not limited to the Japanese companies. Most auiomakers source components from Japanese suppliers and the disruption to the supply chain has hit the production schedules of even non-Japanese automakers.