Wednesday, 16 March 2011

Japanese Disaster: What Are The Impacts On The Auto Industry?

Japanese Disaster: What Are The Impacts On The Auto Industry?

On Monday evening, the delicate battle to stop a nuclear catastrophe from occurring was waged on Japanese soil, less than 100 km from Tokyo, where 35 million people live, while our nation was glued to the Bachelor during prime time. Tokyo is the hub of the Asian economy and the Japanese Stock Exchange and a society closely intertwined with American business.

It goes without saying that the loss of human life due to the tsunami and earthquake and the potential for horrendous genetic defects and cancers associated with radiation are extremely frightening. Because this is a blog about people and cars, I’ll focus on the potential impact the disaster could have on the lives of people who work in the car industry.
In the immediate future, the New York Times reports that Mazda has suspended production at its Hofu and Hiroshima plants until March 20, due to the deepening crises. Toyota has idled all plants through Wednesday, according to the Detroit Free Press. Four plants in northern Japan, including the Central Motor Plant, are near the region where the tsunami and earthquake impacted most severely. Nissan has idled production at the Tochigi and Iwaki plants until Friday. The tsunami destroyed more than 2,300 Nissan Infiniti vehicles. Honda’s Suzuka plant is idled. Suzuki has ceased production until Thursday. Subaru has halted production until Monday. MSNBC reports that the Japanese crises could slow down world production. Toyota and Nissan stocks continue to sink.
The Japanese MotoGP has also been postponed. Originally scheduled for April 24 at the Twin Ring Motegi circuit, the BBC reported that roads leading to Tokyo required repair and sections of the track were cracked in the earth quake. Joann Muller continues to follow this issue on“Transmissions” for Forbes.
But in the long term, here are a few questions I have for the business minds:
In the quest to find new technologies, multiple automakers pool their resources. If Japan is thrust into a deep depression how will this affect industry wide technological innovation? Will this slow down the race to greener technology?
When we look at Toyota, Honda, Nissan, Suzuki, Subaru, Mitsubishi and Mazda, how significantly will the Japanese crises affect production and the flow of the supply chain on domestic and other automakers?
Will Japan be able to keep up with manufacturing demands, with radiation and other environmental concerns affecting production? Will the land be permanently damaged?
Assuming Japan is able to navigate away from further crises, the process of rebuilding its fractured economy could potentially call for more labor at home. Will foreign plants, such as those located in the Southern U.S, be a priority when the Japanese domestic economy needs a sharp boost? Will Japan centralize its business practices?
Finally, will this crises affect the way we look at power sources in ways that transform, and provide impetus for clean energy in our vehicles? Or, will we simply go back to watching prime time as we did after the oil leak in the Gulf? The Nissan Leaf and Chevrolet Volt feel more important as symbols of alternative energy.
The Japanese car business boomed in the 1970s on the strength of observation and dedication to understanding the American culture. It has managed to produce vehicles that have become staples in American lives. It is curious, that to many Americans, Japanese culture is still a foreign concept,and that somehow, though this crises that is closely linked to us, it seems far away.
When you work in the automotive business, you develop global relationships. I have met many people who work for these car companies, and in my cultural reporting, I’ve written for Japanese publications on music. I can’t help but dwell on how scary life must be at the moment. I also grew up in metro Detroit, and attended elementary school with the children of Japanese executives. Japan always seemed close to home. I have spoken to friends who are in the process of evacuating their families from Tokyo, by plane, by ship, or as far as they can drive. In the face of environmental, economic disaster, it is the image of the people that stays with us, that remind us of the fragile nature of humanity in the race toward a more powerful society.

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