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NEWS UPDATES Asean Affairs        15  March 2011

Japanese carmakers worry about parts

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Automobile production is continuing as usual at the three Toyota Motor Thailand (TMT) factories amid growing concern about a possible disruption in the parts supply.

Workers labour on the assembly line at the Toyota plant in Samut Prakan. The company suspended overtime production yesterday out of concern about the supply of parts from Japan as well as from Japanese suppliers in Thailand.

The fears come in the wake of last Friday's devastating 8.9 magnitude earthquake and subsequent tsunami in Japan. TMT has one plant in Samut Prakan and two in Chachoengsao.

A senior executive at the Thai unit said the parent company had suspended manufacturing at all of its plants in Japan until tomorrow due to safety concerns and parts procurement difficulties. An executive at Nissan Motor Thailand confirmed all of the parent's factories in Japan were suspended immediately after the natural disaster. Facilities at a distance from the worst-hit areas in the northeast have since reopened, while those directly affected remain closed.

Executives of Honda Automobile (Thailand), the kingdom's second-largest maker of passenger cars, and Thai Honda Manufacturing Co, a maker of motorcycles and power products, met yesterday to assess the situation.

A Thai Honda Manufacturing executive said the meeting worked to determine what could be done regarding parts supplies from Japan and vehicle exports to that country.

Honda Motor Co will halt production in Japan at one factory from today and at five others from tomorrow. The suspensions will last until Sunday.

Two of the suspensions involve automobile production and the rest motorcycles and power products. Output from all six factories goes to the domestic market.

The executive did not specify where the six factories are located but said the suspensions came after Honda was able to make contact with only 44 of its 113 parts suppliers.

"Since so many of Honda's suppliers cannot be contacted, it's best to halt production," said the executive.

The suspensions will have no affect on Honda's Thailand operations, as only a very small volume of parts is sourced from Japan, nor are fully built products imported from there.

Honda's production in Thailand has a localisation rate (use of local content) of almost 100%. "We're moving quickly to learn which parts will be in short supply so we can solve the problem in a timely manner," said the executive.

Automobile production at Honda's Ayutthaya factory is continuing as normal in the meantime.

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