Nissan, Honda Better Positioned Than Toyota After Japan Quake

Moody’s says that this month’s triple disaster of earthquake, tsunami, and nuclear crisis in Japan will not result in wholesale rating changes for Japanese automakers, but its aftermath will weaken the issuers’ operations and financial performance at least through the first half of fiscal-year 2011, ending next March.

Tadashi Usui, the lead author of the report and a Moody’s vice president in Tokyo, says, “To a large extent, the financial health of our rated Japanese automakers before the disaster determines their vulnerability: Toyota (TM) and Yamaha were less well positioned in their ratings and thus are more vulnerable, Nissan (NSANY.PK) and Honda (HMC) are better positioned, and Isuzu is in the middle of the pack.”

Usui adds, “For example, Toyota had been trying to recover after widespread product recalls in 2010; whereas, Nissan’s performance had been improving and was on review for possible upgrade.”

Usui says, “None of these companies have assembly plants that experienced lasting direct damage from the earthquake or tsunami.” He adds, “However, the indirect effects of power shortages and rolling-black outs, disruptions to supply chains, and staffing issues represent a more serious problem.”

A contributor to the report, Michael Mulvaney, a managing director for Moody’s in New York, adds adds, “Problems at geographically dispersed second- and third-tier suppliers may be severe, and for critical parts, the added costs of finding alternative sources of supply could shave 1% to 2% from automakers’ margins.”

Mulvaney says, “We expect Japanese automakers’ full-year revenues for the coming fiscal year to at best show low single-digit growth as overseas markets help to offset weakness in the domestic Japanese market in the first half of the year.”

In a separate report Moody’s sees no material threat tothe ratings of Europe-based automotive suppliers, which have limited direct exposure to the consequences of the disaster:

However, we believe that they will feel ripple effects in the global supply chain as original equipment manufacturers (OEMs) reduce output in Europe and North America. Although OEMs and suppliers worldwide are exploring alternatives to supply shortages caused in Japan, we believe it will take some time to realign the supply chain where necessary.

Once this has happened, we expect at least some of the lost production volumes to be recovered. We expect the disaster to negatively impact revenue and earnings, primarily in Q2 2011. In addition, halts in OEM production might impact working capital consumption. However, we estimate that the impact on the credit metrics of Europe-based automotive suppliers will only be temporary.

Source;
http://seekingalpha.com/article/261141-nissan-honda-better-positioned-than-toyota-after-japan-quake

Honda Suspends Dealer Orders on Japan-Built Cars

After Mazda announced last week that it would halt orders on U.S. deliveries of all Japan-made cars, Honda has now decided to follow a similar action. Informing dealers that they can no longer order Japan-build cars, retailers will be forced to move only what is on their lot until the Japanese supply chain can be mended.

Vehicles affected by the order include hybrid models like the CR-Z, Insight and Civic Hybrid, as well as some CR-V models (many of which are also build in North America). The Acura luxury division has also been affected, with the TSX and RL also made in Japan.

With current dealer inventories, this shouldn’t pose a product shortage unless the delay is lengthy.

Other Japanese automakers, including Mitsubishi, Nissan and Toyota, have yet to announce any such supply chain issues.

Source;

http://www.autoguide.com/auto-news/2011/03/honda-suspends-dealer-orders-on-japan-built-cars.html

Honda reveals earthquake aid plans

Honda's relief efforts to deal with the aftermath of the earthquake and tsunami disaster announced

After suffering damage to some factories including a collapsed wall at its R&D facility in Tochigi where one employee was killed Honda has revealed that many of its plants in Japan will remain closed all this week.

As well as leading to the death of a 43 year old male employee, the damage at Tochigi is reported to have caused injuries to 30 other Honda workers. Now Honda has revealed its plans to cope with the aftermath of the earthquake and tsunami.

The firm's full release is below:

TOKYO, Japan, March 14, 2011 - Honda would like to express its deepest sympathy and condolences to the victims of The 2011 Off the Pacific Coast of Tohoku Earthquake in northeastern Japan and our sincere hopes for the earliest possible relief and recovery of the affected areas.

Considering the current situation of the nationwide recovery efforts in Japan, Honda has decided the following:

-As of March 14, all production activities are suspended at the following Honda plants: Sayama Plant at Saitama Factory (Sayama, Saitama), Ogawa Plant (Ogawa-machi, Hiki-gun Saitama), Tochigi Factory (Moka, Tochigi), Hamamatsu Factory (Hamamatsu, Shizuoka) and Suzuka Factory (Suzuka, Mie).

-From March 15 through 20, Honda will suspend all production activities at its plants listed above as well as at Kumamoto Factory (Ozu-machi, Kikuchi-gun, Kumamoto).

-From March 14 through 20, Honda will suspend regular operations at all Honda facilities in the Tochigi area, where damage was more serious, (including Tochigi Factory, Honda R&D Co., Ltd.

-Automobile R&D Center (Tochigi) , Honda Engineering Co., Ltd., etc.), and focus on the recovery of each operation. Honda associates will not come to work during this time.

With the hope to contribute to the earliest possible relief and recovery of affected areas, Honda will provide the following aid:

-300 million yen toward the relief and recovery effort.

-A total of 1,000 generators (gasoline-powered and home-use gas canister-powered), along with 5,000 gas canisters. Honda also will dispatch its staff to explain how to use the donated generators.

Honda will cooperate to the electricity conservation efforts and the rolling blackout, prioritizing the relief and recovery of affected areas.

Honda decided the following regarding its recruiting activities so that victims of the earthquake can focus on recovery.

Prospective associates, who are scheduled to join the company in April, can choose to delay their first day of work by up to two months if they or their families are affected by the earthquake.

For those who have applied for next year's recruiting process starting in April of this year (associates who would join the company in April 2012) from the affected areas (six prefectures in Tohoku areas and Ibaraki prefecture), Honda will ensure that the testing/interviewing of those applicants will be conducted in June or later. More details will be posted on the recruiting section of the Honda website in April.

Source;

http://www.visordown.com/motorcycle-news--general-news/honda-reveals-earthquake-aid-plans/17489.html

Japan’s carmakers halt domestic operations

By John Reed, Motor Industry Correspondent
Published: March 14 2011 13:00 Last updated: March 14 2011 13:00
Japan’s four biggest carmakers have said they are suspending production at their domestic plants through to at least Wednesday to cope with the after-effects of Friday’s earthquake and tsunami.

Honda, Japan’s second-largest carmaker, said on Monday that it was halting domestic production for a week and that damage to its suppliers’ plants might disrupt its UK production.

The announcement was an early sign of the disaster’s potential knock-on effect on the global supply chain in one of the world’s largest industries. Toyota, Nissan, and Mitsubishi Motors also extended shutdowns of their plants in order to assess and deal with damage from the quake.

Honda on Monday said that it had shut down its plants to check safety, power supply and infrastructure issues, along with the state of its local suppliers.

Honda said that it had 113 suppliers around the area in north-east Japan where the main tremors from the earthquake were felt. The carmaker said that it had been in touch with 44 of them, but was still trying to contact the remaining 69.

A UK spokesman for Honda said there were “potential supply issues” at its car plant in Swindon, England, where it makes its CR-V sport utility vehicle, its Jazz small car, and its Civic mid-size model.

“There will be a knock-on effect for car production in the UK, but we don’t yet know what it is,” he said.

Honda said that it had established emergency co-ordination centres in Swindon and at its plant in Tochigi in Japan in order to liaise on business issues concerning its supply of components and the well-being of its employees.

Toyota, Japan’s and the global car industry’s biggest producer, on Monday said that a shutdown already planned for Monday at all of its Japanese plants – including those of its Hino and Daihatsu subsidiaries – would be extended through to Wednesday.

The company makes some of its most popular models – including the bulk of its Prius hybrid model and Lexus luxury marque’s cars – in Japan.

Toyota said that the current three-day halt to production would not immediately affect its overseas operations. “The current production stop is for three days”, said a Toyota spokesman based in Brussels. “As such this doesn’t have an impact outside Japan, but we need to assess further.”

Nissan, Japan’s third-largest carmaker, said that it would halt operations at its Oppama, Kyushu, Shatai, and Yokahama plants south of Tokyo until Wednesday and at its Tochigi and Iwaki plants north of Tokyo until Friday.

The company also said that it would do its utmost to support “restoration activities” in Japan, including by conserving electricity usage in all of its activities.

Mitsubishi said that it was suspending plant operations on Monday and Tuesday to check safety at its suppliers. The producer’s main production hubs are located in Japan’s Aichi, Gifu, and Okayama prefectures, and were not affected by the earthquake.

However, it said that some of its suppliers had reported damage.

Japan’s car industry is one of the world’s largest. North-eastern Japan has become a major car-production centre in recent years, with Toyota, Honda, Nissan and operating plants there.

Most global carmakers, including Japan’s, produce and source parts for most of their cars in the regions where they build them.

However, Japan’s producers in particular are known for producing some of their models destined for export locally in order to preserve jobs and expertise at home in the face of declining domestic demand for cars.

Source;
http://www.ft.com/cms/s/0/8d5f631e-4e2a-11e0-a9fa-00144feab49a.html#axzz1Ga6cJOuQ