Wednesday, March 16, 2011

Another Lesson from Japan. Globalization Leaves Every Country Very, Very Vulnerable

Who would have thought that a massive wave washing ashore in northeastern Japan would shut down auto assembly lines in North America?   That's what happens in today's world of lean and fragile globalized manufacturing.

All the big Japanese auto manufacturers build cars in North America and almost everything in those cars is also made here.   Almost.   But there remains some 7-8%  of the components that come from Japan and you can't build, much less sell a car that's only 92% complete.

Because the industry’s global supply chain is so integrated, analysts predict that short-term disruptions of both vehicle parts and some popular models are imminent.

Not only is Japan’s ravaged northeastern region a major hub for auto parts suppliers and critical infrastructure that traditionally ensured the flow of goods to overseas markets, but persistent power outages have not let up.

For those reasons, Nissan Inc. said some Infiniti models, as well as the GTR and 370Z, could face delayed shipment to Canada and the United States. The North American supply of fuel-efficient cars such as the Toyota Yaris, Toyota Prius hybrid and Honda Fit is at risk because those cars are only made in Japan.

Shutdowns could affect Toyota Canada Inc. and Honda Canada Inc., which each have two assembly plants in Canada. Toyota employs about 6,200 workers and Honda employs around 4,600.


doconnor said...

There is the other size of the coin too. Because of globalization quake damaged regions may be able to recover more quickly because they are less dependent on local sources of supply that would have been destroyed and can have supplies brought in.

The Mound of Sound said...

I'm not sure that international disaster relief is really a function of globalization.