Toyota Motor Corp., Honda Motor Co. and other big Asian automakers are resorting to airlifts of components and stopping some operations in the US as disruption from the closure of West Coast ports worsens.
Toyota, the world's No. 3 automaker, yesterday laid off at least 40 workers at a vehicle distribution center in Long Beach, California and suspended some production at its nearby TABC Inc.
parts plant. The automaker halted auto production at the New United Motor Manufacturing Inc. plant it shares with General Motors Corp. in Fremont, California on Wednesday.
"It's costing millions of dollars," Jim Wiseman, vice president of Toyota's North America manufacturing unit, said in a radio interview. "We are looking at different options for the others, such as airlifting in parts. That's expensive but we think it may be a way to keep the other [operations] open." A US federal mediator began talks Thursday to end the week-long closure of 29 ports in California, Oregon and Washington states because of a dispute between dockworkers and shipping companies. The shutdown has disrupted trade with Asia that's worth US$300 billion a year and threatens to slow the US economy, analysts say.
Automakers are feeling the squeeze in part because they rely on manufacturing systems that require parts deliveries on short notice. Honda started airlifting critical parts from Japan to the US Thursday, company spokesman Jeffrey Smith said. The company plans four shipments by air by Oct. 8, said Yuriko Yabe, a Honda spokeswoman in Tokyo.
Toyota shares rose as much as 1.6 percent to ?3,090, and traded at ?3,070 as of 10:46am in Tokyo, while Honda gained as much as 1.8 percent to ?4,970.
"Most manufacturers generally have shifted to `just-in-time' deliveries," said Laurie Felax, a vice president at Harbour & Associates, which rates auto-plant efficiency. Parts "inventories are much lower than they used to be so the impact of this kind of interruption on production is certainly more significant." Nissan Motor Co., which raised US sales 9 percent in the first nine months of 2002, canceled overtime shifts in Tennessee, where it makes the new Altima model, said spokesman Scott Vazin.
"We will have to halt operation at our plants as early as next week if the dispute continues," said Nissan spokesman Gerry Spahn. "There's a potential this can be a serious issue in the future and we hope the two parties will reach an agreement." Japan's No. 3 automaker yesterday took delivery of 3,300 Infiniti M45 luxury sedans that were unloaded at Los Angeles-area ports before last week's shutdown and should be able to begin today's model release as planned, Vazin said.
Toyota is considering airlifting parts to its plant in California as early as Monday to restart some passenger car production at the plant, Toyota spokesman Dan Sieger said.
Toyota's Princeton, Indiana, truck plant that makes Sequoia sport-utility vehicles and Tundra pickup trucks may also have difficulty maintaining full production as it relies on V-8 engines imported from Japan, Sieger said.
The automaker has begun lobbying US congressional officials from the six states where it has plants to back federal action to reopen the ports, Toyota's Wiseman said.
Hyundai Motor Co., South Korea's largest automaker, has a 53-day inventory of cars and light trucks and arranged for daily airfreight deliveries of parts to ensure dealers can provide standard vehicle service, spokesman Mike Anson said.
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