Nissan Motor and Honda are trying to accelerate their efforts to resume full production after the country’s biggest earthquake on record and consequent parts supply problems.
Nissan chief executive Carlos Ghosn told Reuters on Tuesday employees were working hard to restore production to full levels before an October target, after defying the odds with speedy recovery at the engine plant badly damaged by the 11 March earthquake.
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“I can tell you that every single Nissan employee is trying to (prove) me wrong when I say October. This is absolutely a sense of motivation from everybody to say we’re going to make it happen before October,” Ghosn said in an interview at just-restored Iwaki engine plant, about 60km (35 miles) from Tokyo Electric Power’s crippled nuclear power station. “But reasonably, I don’t think it’s going to be before October,” he added.
The 560,000-units-a-year Iwaki factory, which builds 2.5 to 3.7-litre engines for the Fuga, Murano, Infiniti M, and other models, marked its return to full production capacity on Tuesday.
Addressing about 400 employees at the Iwaki engine plant to celebrate its full recovery, Ghosn expressed admiration for the workers whose dedication fueled a full recovery at record speed.
“When I came here last time I remember very well: there was no electricity, there was no water, there was no fuel, there were barely no Nissan employees in the plant because there was nothing to do,” said Ghosn, who last visited the plant on 29 March.
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By GlobalData“The floor was torn, the equipment was misaligned, there were pipes hanging, and frankly it was very difficult to forecast when production would be back to where it was.”
At the time of the quake, an elevator shaft for cylinder blocks had tilted, 175kg engines had toppled from their assembly stands, and cracks had formed in the concrete floors. None of that was visible on Tuesday as machines hummed at full speed, with workers preparing for an hour of overtime, Reuters reported.
One side of the factory floor had sunk about 15-20 cm, but steel legs and other reinforcements were put in place to correct the height of precision machinery, Hikaru Kawasumi, a manager at the plant, told the news agency during a tour of the plant.
The factory was hit by a massive aftershock on 11 April – exactly one month after the first tremor – erasing much of the restoration that had been done up to that point.
Just five weeks later, the plant is preparing to produce at a faster pace than planned for the next three months to make up for lost production, Ghosn said.
Nissan would invest about JPY3bn yen to reinforce the Iwaki factory’s facilities to protect it against future earthquakes, he told Reuters.
“The situation surrounding [the supply chain] restoration is constantly changing, so [production] plans are changed weekly or bi-weekly in some cases, but the [restoration] process is occurring quicker than first envisioned,” Yoshihiko Tabei of Kazaka Securities told Reuters.
Honda Motor also said the recovery of its parts supply is speeding up.
“We want to move up our schedule for returning to normal, but that depends on the supply of parts,” Honda’s chief financial officer, Fumihiko Ike, told Reuters. “But we are seeing recovery speed up in those supplies.”
He said the company planned to announce its earnings forecast for the current fiscal year before the annual shareholders’ meeting on 23 June.
Honda has limited access to electronic components, rubber parts and colouring materials, Ike said. The sole global plant for an additive for some types of high gloss metallic paint finish was knocked out by the ‘quake, causing automakers to temporarily stop offering some paint colours.
Late last month, Honda said it expected vehicle production to fully return to levels planned before the March earthquake by year-end and to stay at about half those plans through to the end of June.
Ike said on Tuesday this was a worst-case scenario, however, suggesting the situation at the automaker could be better than previously expected.
The catastrophes in Japan came at a particularly inopportune time for Honda, which has just remodelled its popular Civic and had been counting on it to drive sales growth this year.
Ike told Reuters it would be tough to ensure smooth supplies of the redesigned Civic in the United Sates.
