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Floods in Thailand Affect Toyota's Operation

Source: WSJ - Chester Dawson & Yoshio Takahashi

Posted on 28 Oct 2011

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Toyota Motor Corp. extended ongoing production cutbacks at its Japanese and Southeast Asian factories to cope with a shortage of parts from Thailand, where flooding has affected operations.

Japan's largest auto maker also said work at its Thailand facilities will be halted through Nov. 5, affecting production in Japan, the U.S., Canada, South Africa, the Philippines, Vietnam and Indonesia.

In Japan, it is cutting production hours on Saturday and taking unspecified measures to cut production through Nov. 5. "A decision on production from Nov. 7 onward will be made" in the future, Toyota said.

In North America, it is implementing a one-day stoppage, on Saturday, and halting overtime at assembly plants in Indiana, Kentucky and Ontario, Canada, along with an engine factory in West Virginia.

Thai flooding has affected auto makers and suppliers including Ford Motor Co., Michelin and Honda Motor Co.

Honda, Japan's third-largest car maker, said Thursday it has delayed release of a partly redesigned Life Diva because it has been unable to get the necessary parts. Its Thai operations have been among the hardest hit of major auto makers.

The widespread flooding threatens to hamper the efforts by Toyota and other Japanese auto makers with facilities in that country to ramp up production to make up for lost output in the wake of the March earthquake in Japan.

On Wednesday, Toyota said it built 309,389 vehicles in September at its Japanese factories, up 1.2% from the same month a year earlier.

The company has said previously it would scale back production in Indonesia, the Philippines and Vietnam because of difficulties exporting some parts from Thailand. The car maker estimates the disruption in the parts supply chain has affected about 100 kinds of parts, including electronic items.

As of last Friday, the Thai floods had resulted in an output loss of 37,500 vehicles in the Southeast Asian country since Toyota idled three plants there on Oct. 10.