Honda cuts production in UK after Japan quake

Swindon factory output is halved because of parts shortages

By Sarah Arnott
Sunday 23 October 2011 08:19

Honda is halving production at its Swindon car factory because of a parts shortages caused by the Japanese earthquake and tsunami.

Honda is the first car maker to cut production in the UK as a result of the quake. The majority of parts used at Honda's Swindon factory are sourced in Europe. But to manage the drag in supply from Japan the factory will run at 50 per cent capacity from next Monday, the company said yesterday.

Honda hopes production will return to normal by the end of May. In the meantime, staff at the plant will continue to receive full pay, and the time will be made up later in the year through the existing flexitime system.

Ken Keir, the executive vice-president of Honda Europe, said: "We've decided to reduce our production volumes as it enables us to continue with our manufacturing activities."

In Japan, Honda's car factories are also still at 50 per cent capacity although its motorcycle, generator and engine plants are back up and running. Facilities in the US are already on slowdown and expect to return to normal output rates late next week.

Rival Toyota has been worse hit. The majority of the world's biggest car maker's production in Japan has been stopped altogether, although yesterday it announced plans to bring a third factory back on line next week.

Outside Japan the situation is less drastic, with plants in Europe and the US still working at normal rates, albeit with overtime and weekend work cancelled. But the potential impact on Toyota – which is still struggling to put last year's "sticky pedal" recall debacle behind it – is enough for Moody's to put its credit rating under review yesterday.

Japanese car makers are not the only ones affected by supply chain troubles. Chrysler this week cut overtime in Canada and Mexico, while Ford is idling its Belgian factory for five days, although the company has stressed the move was defensive rather than in response to a specific shortage. The US giant also put a brake on orders for vehicles in "tuxedo black" and three shades of red last month, because the Xirallic pigment used to make the paint shiny is made at a single factory in a coastal town hit by the tsunami.

GM and Peugeot Citroen also slowed production in Europe last month over concerns about the availability of airflow sensors produced by a Hitachi factory north of Tokyo.

With about 500 component makers affected by the disaster – leaving shortages particularly in electronics, rubbers and plastics – the effects of the earthquake on the automotive supply chain could cut global car production by as much as 30 per cent, according to some analyst estimates.

The factory slowdowns are unlikely to have any long-term impact in themselves. But the situation will raise questions about the weaknesses of modern "lean manufacturing" models with stripped-down supply chains and factories permanently running at full tilt and so unable to pick up the slack from elsewhere.

"In terms of global production levels this is just a blip," David Raistrick, the head of manufacturing at Deloitte, said. "But in a wider sense the industry will likely look at lean manufacturing because this is the result of having just enough parts held in stock, a limited number of suppliers and absolutely no excess capacity."

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