Severe weather, port blockages and microchip shortages are wreaking havoc on U.S. auto production with Toyota Motor Corp. and Honda Motor Co. Ltd. now facing disruptions.
The Japanese automakers said Wednesday they are halting production at plants in North America because of limits in needed supplies, including petrochemicals used in plastic and electronic components and semiconductors. They join other automakers like General Motors Co. that also have had to shut down plants this month because of the global shortage of microchips used for driver-assist features to heated seats as well as in consumer electronics.
The challenges, especially with semiconductors, highlight the need for strategic alignments for certain parts that require large amounts of scale and investment. That includes batteries needed for forthcoming electric vehicles.
"The scale of production is huge, the investment is huge, and the alignment is strategic," Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, said of both semiconductors and vehicle batteries. "Disruptions that happen there are going to be difficult to deal with. They do not flow as smoothly as other parts in the industry. It's sticky and chunky."
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Toyota's disruptions aren't related to semiconductors, but to a shortage of petrochemicals resulting from extreme winter weather in Texas and Mexico earlier this month. It affects production of Camry and Avalon sedans and the hybrid RAV4 SUV in Kentucky, engines in West Virginia and Tacoma pickups in Mexico. It is unclear how long the disruption will last, but the automaker does not expect to furlough any employees.
That's also the case for North American employees at Honda even though the company says all of its auto plants in the U.S. and Canada are being affected in some way. Production at most plants will be halted next week, though the situation remains fluid.
"We continue to manage a number of supply chain issues related to the impact from COVID-19, congestion at various ports, the microchip shortage and severe winter weather over the past several weeks," Honda said in a statement.
Pandemic-induced restrictions at West Coast ports have become overwhelmed following the implementation of COVID-19 restrictions. Vancouver, Washington, had a record-breaking 2020 with revenues totaling $50 million, a 15% increase over 2019. February imports rose 26% year-over-year in Oakland, California, and 53% in Los Angeles.
“One year ago, global trade slowed to a crawl as the Covid-19 pandemic first hit China and then spread worldwide,” Gene Seroka, port of Los Angeles executive director, said this week in a statement. “Today, we are in the seventh month of an unparalleled import surge, driven by unprecedented demands by American consumers.”