Photo: Hessam Bakhtiarzadeh
Toyota Motor Corp. said on Saturday it may halt production at its domestic plants early next month due to a steel shortage, following an explosion at a steel plant operated by one of its affiliates.
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The blast at an Aichi Steel plant has curbed production of steel parts, which may impact output at the world’s best-selling automaker which produces around 40% of its global output in Japan.
“At the moment, there is enough supply inventory to keep our domestic plants running until Feb. 6,” a Toyota spokesman told Reuters, adding that overtime and weekend shifts for next week had been canceled.
“After that, we will be monitoring our supply situation on a day-by-day basis and decide accordingly.”
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Aichi Steel said that the Jan. 8 explosion at its Chita plant in central Japan dented production of specialty steel parts. It added that it aimed to resume operations in March.
It seems rather shocking that Toyota could actually face a line shut-down. Their historical policy of tri-sourcing with some 60/20/20 supplier mix should prevent precisely this type of shut-down. Sole-sourcing is an inherently risky strategy for precisely this reason.
I’d bet that Toyota has another supplier waiting in the wings before a plant shut-down. If not, it sounds like we’ll have another story! LAR
If Japan would open its markets to more U.S. SBQ suppliers such situations could be mitigated.
Great point!