Dual-sourcing dilemma hits Japan again

Steel-plant blast forces Toyota to suspend output

Steel-plant blast forces Toyota to suspend output

Toyota ships key nameplates, including the Toyota Prius hybrid, to the U.S. from Japan.

TOKYO — In 2011, Japan’s auto industry was knocked offline for months because of a lack of semiconductors made at a plant damaged during the deadly earthquake and tsunami.

Carmakers bounced back with a valuable lesson: Always source key components from at least two suppliers.

Five years later, it appears that lesson didn’t completely sink in.

Toyota Motor Corp. is suspending production on all assembly lines in Japan this week because an explosion at a steel plant torpedoed the supply of steel used in engines, transmissions and chassis systems. The six-day shutdown could affect U.S. shipments of thousands of Lexus and Toyota vehicles made in Japan.

The stoppage follows a Jan. 8 explosion at an Aichi Steel Corp. factory that makes electromagnetic and stainless steel products. There were no injuries.

Toyota’s Feb. 8-13 shutdown could cost the automaker as many as 84,000 units of lost production and possibly around 14,200 units of exports to the U.S.

Toyota declined to detail the stoppage’s impact on output. But the company produces around 14,000 Lexus, Toyota and Scion vehicles a day in Japan, and exports about 17 percent of its domestic output to the U.S.

Toyota ships key nameplates, including most of the Lexus and Scion lineups and the Toyota Prius hybrid, to the U.S. from Japan.

The explosion occurred at an Aichi Steel plant in Chita city in Aichi prefecture, Toyota’s home region and its main production base. Aichi Steel is a Toyota Group company spun off from Toyoda Automatic Loom Works in 1940 as a specialty steel maker.

Toyota said its domestic assembly plants should resume operations on Feb. 15.

A spokesman said Toyota continues to improve transparency and flexibility of its supply chain in the wake of the 2011 shutdown. But he declined to say whether the company had effectively double-sourced steel supplies before the explosion.

The automaker noted it was looking for work-arounds to the shortage, including sourcing steel from alternate lines at Aichi Steel and getting metal from other steel makers.

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