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Published: Tuesday, 4/5/2011

Toyota to close plants in North America

Reopening will await parts from Japan

ASSOCIATED PRESS
The plant in Georgetown, Ky., is one of 13 likely to be shut down this month. The plant in Georgetown, Ky., is one of 13 likely to be shut down this month.
ASSOCIATED PRESS Enlarge

LOUISVILLE, Ky. -- Toyota Motor Corp. said Monday a shutdown of all its North American factories is inevitable because of parts shortages stemming from the disasters that hit Japan.

The temporary shutdowns are likely to take place this month and affect 25,000 workers, but no layoffs are expected, spokesman Mike Goss said.

How long the shutdowns last or whether all 13 of Toyota's factories will be affected at the same time depends on when parts production can restart in Japan, Mr. Goss said.

So far the North American plants have been using parts in their inventory or relying on those that were shipped before the earthquake, he said. But those supplies are running low.

"We're going to get to a point this month where that gap in the pipeline starts to show up. So we'll have to suspend production for a while," he said.

A March 11 earthquake and tsunami damaged auto parts plants in northeastern Japan, causing shortages that idled most of the nation's car production. Japan's daily auto output has fallen by more than 500,000 vehicles since the disaster, said Carlos Gomes, Scotiabank senior economist. Some manufacturers are bringing plants back on line, but only at low speeds because of a lack of parts.

Shortages of parts from Japan are affecting other manufacturers. Just last week, Ford Motor Co. and Nissan Motor Co. said that several North American plants would be closed part of this month, and Sergio Marchionne, Chrysler Group LLC's chief executive officer, has said his company will experience disruptions.

Toyota gets about 15 percent of its parts from Japan for cars and trucks built in North America, "but still you have to have them all to build the vehicles," Mr. Goss said.

Toyota, he said, has about 500 companies supplying parts in North America, but many of them get components from Japan that might not be available.

During the shutdowns, workers will focus on training and reviewing operations for ways to improve, Mr. Goss said. They may take vacation or time off without pay.

The shutdowns will affect all Toyota and Lexus models made in North America, he said.

Already several large dealership chains are predicting shortages of models from Japanese automakers in the spring and summer.

Mr. Goss would not estimate how long the assembly lines would be shut down.

"It depends on how fast we can help get those suppliers up and running again in Japan," he said.

Toyota is running short of multiple parts, mainly electronics and paint pigments, said Yoshimi Inaba, chief operating officer for North American operations. The company, he said, is looking for alternative suppliers.

He also said it is too early to predict the impact on Toyota's sales and its effort to rebound from a string of safety recalls last year that have hurt sales.

"We have some inventory. So if the disruption on the production is short enough, then it wouldn't have any major impact," he told reporters after speaking at a literacy event in Louisville. "It is too early to predict how big the impact is."

Last month Toyota warned that production cuts were possible at some North American factories, but said it did not know when or for how long.



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