I often rail against the needlessly complicated and long supply chains that source today’s automobiles from around the globe. The recent double tragedy in Japan of the earthquake and tsunami highlights just how easily that chain can be broken.
First off, my heart goes out to those who have lost family and friends in this horrific tragedy. I already gave to the Red Cross to help Earthquake victims, and there are multiple paths to donate towards the tragedy.
With that out of the way, I have held off on writing anything about the tragedy because I had a strong inkling that this could have huge ramifications on Japan’s largest automakers and their ability to supply parts and vehicles to the U.S. Indeed, the companies hardest hit are among Japan’s largest automakers, including Toyota, Honda, and Nissan. Cars like the Honda Fit, Toyota Yaris, and yes even the Prius have all had their production interrupted and it could ultimately affect a month’s worth of vehicle supply. While the factories that make the Prius and its components avoided major damage, 11 of the country’s nuclear plants have been shut down, meaning these auto plants may not have the juice to resume production, putting tight supplies of the Prius at a premium. A hybrid shortage just as gas prices are ramping up again? Lovely.
It isn’t just Japanese automakers who are suffering though. Jalopnik reports that Sanyo, the battery supplier for Ford’s Fusion Hybrid and Escape, could see shipments delayed even though the battery plan sustained “limited damage.” Another issue are the transmissions supplied by Jatco, another Japanese company potentially affected by the earthquake/tsunami. Ford does not discuss parts supply issues though, so it’s hard to say for sure if there will be an actual shortage or not.
Then there is GM, who The Truth About Cars reports had to shut down the Shreveport, Louisiana plant due to a parts shortage (the plant is scheduled to close permanently in 2012.) These supply issues could spread to many other automakers too, as Japan imports about 2.5 million engines and 8.5 million transmissions to the U.S. every year. On top of that, Japanese companies make many of the parts for all the high-tech gizmos found in modern cars, and could account for up to 20% of the world’s semiconductor output. Many companies have several weeks worth of supply at any time, so these shortages might not start to crop up until a bit further down the road.
Make no mistake, the human toll from this tragedy (now at 6,500 dead and still rising) is a far more concerning issue than some guy who has to wait a few extra weeks for his hybrid car. But I think that automakers in particular need to glean a few lessons from this tragedy, most importantly that the supply chain modern companies have come to rely on is incredibly weak and could snap at a moment’s notice. The devestation in Japan was bad, no doubt, but they are a sturdy people and I’ve no doubt they will recover and rebuild. But what if that earthquake and tsunami had struck the California coast? The ports of Los Angeles and Long Beach are the busiest in America billions of dollars in merchandise pass through there on a daily basis. A swamped port could be down for months, and what then? How do you build a car when you can’t get the parts for it?
It simply does not make sense to me to build cars like the Fit and the Prius halfway across the world and then ship them here. It makes even less sense to me that American automakers need to source parts for their own cars from around the planet. Build it here. Source the parts from here. Then you won’t have these huge supply chains where the slightest hiccup affects companies across the globe. If you want to sell a car in America, you should have to build it in America, and I don’t care if you’re Toyota, Mercedes, or Ford, they are all affected the same way when the lights go out.
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. You can read about his slow descent into madness at Sublime Burnout or follow his non-nonsensical ramblings on Twitter @harshcougar.