Japan’s catastrophic earthquake has prompted business analysts to urge manufacturers rethink production location strategy.
“For Japanese OEMs there has to be more focus on regional manufacturing or at least multiple facilities so you don’t end up with the situation we have today,” international business advisory firm BBK CEO Bill Diehl said.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“When you look at Honda and Toyota they have done a nice job of using North American suppliers but we should see you have to have some variation in manufacturing capability. Not all in the same location – that could be a good thing for North American suppliers.”
Diehl added the ‘Detroit three’s production schedules had been impacted in a limited way, while Toyota, Nissan and Honda had impacted inventory levels, affecting vehicle delivery ability and potentially, market share.
For its part the Original Equipment Suppliers Association (OESA) echoed BBK’s assessment that further business opportunities could exist for North American suppliers following Japan’s difficulties.
“Ultimately, there could be difficult capability to service components out of the regions,” OESA head of industry analysis and economics Dave Andrea said.
“One of our supplier members outside Chicago said they were picking up extra orders. I would look at tweaking the system and having visibility down through Tiers 2, 3 and 4.”
However, Diehl noted the extraordinary and rare nature of the Japanese earthquake that nobody could have foreseen.
“I just think you have to have better visibility, which is what the OEMs are advocating in the supply base,” he said. “I don’t think you can ever pre-plan for a disaster that we saw.
“What this should drive is…more alternatives to deal with a disaster anywhere in the world. These are not exclusive Japanese issues as we are seeing down in the South East [US] with the tornadoes.”
