Japan & the Global Supply Chain

As the Japan-based vehicle manufacturers and suppliers sort out their recovery following the earthquake/tsunami/reactors problems, it underscores that even seemingly robust institutions are fragile.

As the Japan-based vehicle manufacturers and suppliers sort out their recovery following the earthquake/tsunami/reactors problems, it underscores that even seemingly robust institutions are fragile. The impact on vehicle production in Japan is going to be large by any measure, as facilities have been damaged at the OEMs and suppliers alike. And this has repercussions to the North American operations of these companies, given that there are components made in Japan that are used in the products made in North America. And this is not just affecting the Japan-based companies, as component suppliers of everything from electronics to paint additives are having an effect on production of vehicles at U.S.-based firms, as well.

The supply chain is global. And fragile.

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Japan-based OEMs are regularly putting out bulletins about the status of their facilities. A section of one of these bulletins from Honda caught our attention:

“Concerning operations from April 4 on, Honda will make decisions based on the status of the recovery of Japanese society as a whole as well as the supply of parts. While most of our Japan-based suppliers are making progress to restart production, and many either have or are ready to resume parts production, there are a few suppliers that have yet to resolve the challenge to resume their production. In those cases, Honda is working with its suppliers to help reestablish their operations, while evaluating other possible sources for those parts in the supply chain. Please understand that Honda is making every effort to work toward a full recovery as quickly as possible. We appreciate everyone's understanding during these challenging times.”

“[B]ased on the status of the recovery of Japanese society as a whole. . . .”

It is more than cars and part, chips and additives.

Sometimes with the 24-hour news cycle it is easy to think that even the most horrific events have been eclipsed by something else, something far more trivial.

That was no mere fender-bender that Japan took.