A year into the pandemic, and Covid-19 is having ripple effects on automotive production. The Honda Motor Company and Toyota are just the latest manufacturers to pause production due to supply chain issues. How long will these factories remain behind?
What is the issue?
According to the Wall Street Journal, Toyota, Honda, and Samsung are still having supply-chain issues complicating production. From weather-related issues, Covid-19, and problems docking in port, parts are not making it to the needed destination in time.
In response, Toyota and Honda are halting production at the US factories due to a lack of supplies. These supplies include plastic parts, petrochemicals, and semiconductors.
Honda specifically blamed issues with backlog at California ports and freak snow-related issues slowing down production at some factories.
“Automotive companies initially had to bear the brunt of these shortages, but now it has spread to pretty much all parts of the consumer-electronics sector,”Sanjeev Rana | Senior Analyst at CLSA in Seoul
Due to the pandemic, semiconductors specifically are in short supply due to the increased use of various entertainment needs. This includes computers, tablets, televisions, and phones.
Manufacturers around the world were unprepared for the increase, which has officially spread to the automotive sector.
How long will this impact factories?
In Austin, Texas, Samsung had two factories shut down last month due to the state’s unusual frozen weather conditions. These two factories account for 28% of Samsung’s total output, which is surely sending shockwaves throughout the business.
A second company, NXP Semiconductors, was also forced to shut down due to the weather.
Toyota noted that a lack of petrochemicals was to blame for the factory shutdown in Kentucky. This factor makes the Camry, Avalon, and RAV4 hybrid SUV. At the Toyota factory in Mexico, production on the Tacoma has also been paused.
Honda noted that it would shut down production at most US and Canadian factories due to various issues. The shutdown will begin next Monday, March 22, and would go through the week. Though the company said five plants would shut down, it was not clear which ones would be affected.
Honda and Toyota will bounce back
This is just the latest of shutdowns affecting companies like GM, Ford, and Nissan. The issues in California ports are having a series issues on foreign car manufacturers that rely on imported parts to produce cars.
GM shut down a Corvette factory earlier in the month due to the same issues. This meant a slow-down on the production of the new Corvette and a price increase.
Most of the companies noted said there were hopes to make up for production in the next quarter. The companies hoped not to lay off workers again and said the focus would shift to other duties within the factory.
Hopefully, this will the last of the necessary shutdowns before production can resume at all of the factories.