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Fri, Dec 03, 2004 - Page 12 News List

Nissan `hurt more' by steel woes

AUTO MARKET The company is more vulnerable to steel shortages due to cost-cutting measures and the introduction of several new models since September

AP , TOKYO

Nissan Motor Co's chief executive said yesterday that the Japanese automaker was hurt more than its rivals by the recent steel shortage, and that production is expected to fall short by 15,000 vehicles in March next year.

Chief executive Carlos Ghosn said the production loss in March -- an important month for selling cars in Japan -- would amount to about ?6 billion (US$58.5 million).

Japanese automakers generally produce and sell more cars in March, which comes at the end of the fiscal year.

Ghosn said March was the only month he was worried about, and that "the April situation should become very normal."

Tokyo-based Nissan was forced to shut down three plants in Japan for five days, late last month and early this month, as Japan's steelmakers struggle to keep up with ballooning demand fueled by China's booming economy.

The Japan plant stoppages are the first for Nissan due to a supply shortage, and are expected to delay the output of about 25,000 cars.

Nissan was hurt more than its rivals in Japan, which include Toyota Motor Corp and Honda Motor Co, partly because in September it began introducing a series of models within six months -- a relatively short period.

"That makes us more vulnerable," Ghosn told reporters in Tokyo.

The automaker has also trimmed the number of its suppliers as a cost-cutting strategy that began when France's Renault SA became Nissan's partner and sent Ghosn to lead a turnaround five years ago, focusing on a limited number of steel and parts suppliers to bring down prices.

Ghosn defended his cost-trimming program, noting that the savings achieved by the supplier strategy totaled as much as ?1 trillion (US$9.7 billion), outstripping the value for the 15,000 vehicle shortfall.

Ghosn said his company was negotiating with South Korean steelmaker Posco and European steel giant Arcelor SA, which supplies Renault, to make up for the shortfall.

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