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March 28, 2011updated 08 Apr 2021 8:06am

JAPAN ‘QUAKE: Europeans soon to be affected – reports

Volkswagen, PSA Peugeot Citroen, Ford and other European automakers may be forced to halt production in coming weeks as component suppliers in earthquake-ravaged Japan struggle to restart factories, weekend media reports said.

Volkswagen, PSA Peugeot Citroen, Ford and other European automakers may be forced to halt production in coming weeks as component suppliers in earthquake-ravaged Japan struggle to restart factories, weekend media reports said.

The recovery to normal production levels may take months and cost the industry “billions of euros” in lost revenue, Lars Holmqvist, head of the region’s Clepa auto suppliers association, told Bloomberg News.

“This will cause disruptions in Europe without question,” Holmqvist, whose group represents more than 3,000 companies, said. The effect on carmakers will probably be felt in the next few weeks as local supplies of Japanese parts such as semiconductors and infotainment systems dry up, he said.

Production of some Peugeot and Citroen models will fall as much as 60% because of a shortage of Hitachi diesel engine parts, Peugeot has said. General Motors’ Opel unit last week axed shifts at plants in Germany and Spain before finding a new source of electronics components in the US.

Global auto output may drop by about 30% if parts plants affected by the quake don’t return to operation within six weeks, Michael Robinet, vice president of Lexington, Massachusetts-based IHS said. Most major automakers will experience disruptions by mid-April because supply networks are intertwined, he added.

German automakers have begun inquiring about government support for workers if they halt assembly lines because of missing components from Japan, Anja Huth, a spokeswoman for the Nuremberg-based Federal Labour Agency told Bloomberg.

“The requests are coming from auto manufacturers because the situation is increasingly tight,” Huth said.

The agency, which subsidises pay if economic conditions force a slowdown, has determined the effects of the earthquake are a valid justification for shorter work weeks, she said.

Ford’s European unit, based in Cologne, Germany, hasn’t ruled out applying for short-time work, spokesman Adrian Schmitz told Bloomberg.

“It all depends on how the situation develops,” Schmitz said. Ford is in close contacts with suppliers and a shortage of components from Japan hasn’t disrupted production so far, he said.

But a subsequent Wall Street Journal report on Saturday said Ford would shut its plant in Genk, Belgium, for five days from 4 April, to conserve parts. Genk builds larger models such as the Mondeo, S-Max and Galaxy.

Citing a US spokesman, the report also said the carmaker has urged its sales outlets to stop taking orders for new cars in certain colours due to dwindling supply of pigment in Japan.

A parts shortage from Japan would have ripple effects on other suppliers because missing parts would delay sales of other components they assemble, said Clepa’s Holmqvist.

“Most of the items from Japanese suppliers are something unique so substitution is that much more difficult,” he said, estimating that suppliers in the country are operating at 60% capacity.

Autoliv, the world’s largest producer of automotive seatbelts and airbags, has resumed limited production in Japan as some carmakers in the country have started operating again, chief executive officer Jan Carlson told Bloomberg.

“Some production lines are operating at 50% and for some lines it’s less,” Carlson, said after a three-day visit to Japan. Autoliv suffered only ”cosmetic damages” to Japanese factories, he said.

“The factories are back to the way they were before the earthquake, you don’t notice anything on the production equipment,” Carlson said in Sweden.

Robert Bosch, the world’s biggest partsmaker, can’t predict whether it will be able to secure component supplies beyond the end of this week, spokesman Christoph Zemelka told Bloomberg. Electronics components are the scarcest, he said.

Continental may face supply shortfalls in certain areas, Katja Mattl, a spokeswoman for the Hanover, Germany-based company, told the news agency. It has secured parts for the next three to four weeks and is working on long-term access, she said.

Volvo Cars has been able to secure its production to the end of the week, spokesman Stefan Elfstrom said. Volvo gets about 10% of components from Japan. It has about 30 Japanese suppliers, including seven based in the most damaged areas, he told Bloomberg.

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