Automakers feel effects of Japan crisis

DETROIT (AP) - A week after the disaster in Japan erupted, its impact on automakers around the world is worsening.

Most of Japan's auto industry is shut down. Factories from Louisiana to Thailand are low on Japanese-made parts. Idled plants are costing companies hundreds of millions of dollars. And U.S. car dealers may not get the cars they order this spring.

If parts factories in Japan stay closed for several more weeks, dealers and manufacturers will feel deepening effects: fewer cars, diminished revenue and frustrated customers.

Analysts said it's too early to calculate the cost to the overall industry. But Goldman Sachs estimates the shutdowns are costing Japanese automakers more than $150 million a day.

Even if Japanese auto plants manage to restart in the next few weeks and make up lost production, threats will remain. Hundreds of car part suppliers were near the epicenter of the earthquake and tsunami in northeastern Japan.

How fast they can feed parts to car plants is unclear. Even after plants restart, the threat of rolling electricity blackouts - caused by Japan's crippled nuclear reactors - could hamper production for months.

Potentially, the damage could reshuffle the entire industry. Rivals like Korea's Hyundai Motor Co. could snap up new customers if the Japanese companies can't serve them.

U.S. companies are hardly immune to the threats. General Motors Co. will halt production at its pickup plant in Shreveport, La., next week. It's the first time a U.S.-based automaker will have stopped production in North America over parts shortages caused by the Japan crisis.

The Shreveport plant relies on Japanese-made transmissions for the two small pickups it produces there. So the lack of parts from Japan is forcing the operation to close down. GM didn't say when production would resume at the site, which employs 900 workers.

"They haven't given us any indication," says Doug Ebey, head of the United Auto Workers local in Shreveport.

GM will pay the workers most of their normal take-home pay even though the plant isn't operating.

While most global plants have two to six weeks' worth of supplies now, those will eventually dwindle and could lead to more plant shutdowns, said Michael Robinet, director of global forecasting at IHS Automotive.

Before the earthquake, Japan was making 37,000 cars and trucks each day. It exported more than half of them. Fourteen percent of the 72 million vehicles produced worldwide last year were made in Japan.

But Toyota Motor Corp., Honda Motor Co., Nissan Motor Co. and others have shut down most of their facilities in Japan through at least the middle of next week. And they've warned that the shutdowns could be extended.

Goldman Sachs estimates the shutdown is costing Toyota more than $73 million a day. And it thinks the cost is about $25 million a day each for Honda, Nissan and Suzuki Motor Corp.

That means a 30-day shutdown would cost Toyota $2 billion. The automaker could absorb that hit without a major impact on earnings. Last year's safety recalls also cost Toyota an estimated $2 billion, and it still made a $2.3 billion annual profit.

But the latest crisis comes as the rising cost of the yen is already squeezing Japanese automakers' profits.

Japan is home to hundreds of auto parts suppliers, from big multinationals like Denso Corp., which sells parts to every major automaker and had $32 billion in sales last year, to tiny machine shops in northeastern Japan that make parts for suppliers.

It's been difficult for auto companies to assess the condition of their supplier network or the roads, railways and ports needed to deliver parts. Honda said it took nearly a week just to make contact with its top 100 parts suppliers.

Car companies are scrambling to find other suppliers from their networks, including overseas ones, to replace those disabled by the quake, said Koji Endo, analyst with Advanced Research Japan.

But for more complex parts like navigation display screens and computer chips, it won't be possible to find replacements. Toshiba Corp., which makes liquid crystal screens for autos, has closed one of its Japanese plants for at least a month.

Once suppliers are able to produce parts again, Japan could face rolling blackouts for at least six months because of the damage to nuclear power plants. Auto plants can't be easily restarted if the power goes out.

And electricity needs are enormous. It takes at least four hours to heat the ovens that dry automotive paint, for example. Without paint, the cars can't be finished. And the molten steel used for doors and other parts has to be dumped if it starts to cool.

Edmunds.com Senior Analyst Bill Visnic said there could be a run on the Toyota Prius, a car exclusively made in Japan, because buyers are worried that dealers will sell out. That might help Toyota fetch higher prices.

But on the other hand, buyers might shun Japanese cars because they're worried that dealers are inflating prices, or they're concerned about Japan's manufacturing capability.