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Honda, Toyota considering supply shift amid Big Three bankruptcy concerns

01/01/2009, 8:06 PM

By Drew Johnson

General Motors and Chrysler may have sidestepped bankruptcy via a $13.4 billion emergency loan, but some foreign automakers still have the two on life support. Because Toyota and Honda think bankruptcy could be a possible outcome for two of the Big Three, the Japanese automakers are considering altering their supply lines.

Like most manufacturers, Honda and Toyota both use a ‘just-in-time’ manufacturing system, but could be planning a supply chain shift in order to safeguard against a Big Three bankruptcy.

Roughly 50 percent of Honda and Toyota’s U.S. supplier base is shared with the Big Three, which has the Japanese automakers concerned about a Detroit bankruptcy. If either GM or Chrysler were to fail, it would mean more bankruptcies at the supplier level, which would interrupt supply lines for the whole industry.

In order to prevent a Detroit bankruptcy from wreaking havoc on the manufacturing process, both Honda and Toyota are considering switching from a JIT system to an inventory system. Although housing inventory is more expensive than using JIT – due to the need for warehouse space – it could prevent a disruption in the manufacturing process.

“We continue contingency planning even after the bailout,” Mike Goss, a spokesman for Toyota’s North American manufacturing unit in Erlanger, Kentucky, told The Detroit News. “We hope the loans provided to Detroit will also help to stabilize suppliers, but the very slow market remains a concern for all.”

Toyota and Honda haven’t made an official decision on whether to rely more heavily on an inventory system, but if the situation continues to worsen in Detroit, expect an announcement on the matter in the coming months.

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01/01, 8:14 PM

posted by:

Gundy

I can’t believe how fast all this came on. Wasn’t everyone else at least a little surprised as September and October unfolded with this whole financial “crisis” deal? We ain’t in Kansas anymore Dorth… Could Honda and/or Toyota ever be in the condition that the US automakers are in now? I don’t see it, but I didn’t really see the Big-3 being in this horrible shape a year ago either.

01/01, 8:35 PM

posted by:

iluvamcars

I love seeing confidence within the industry. Toyota and Honda, you should just stop making those ugly cars and make cars that actually look nice compared to the big two’s cars.

01/01, 8:48 PM

posted by:

Fit19

Yes, because the big 2’s cars are selling oh so well. Please. Kudos to Honda and Toyota for being proactive to the situation, instead of reactive (read ‘too late’) like the US auto manufacturers.

01/01, 8:51 PM

posted by:

LeftLaneVy

iluvamcars,

it seems style is toyota and honda’s lower priorities, and they take on the philosophy of “an engine and 4 wheels to get from point A to point B.”

buying “nice looking” cars nowadays has a lot more consequence than cars built with the aim of being fuel efficient, reliable, and somewhat cheaper.

A long time ago, I digged aggressive, powerful cars like the mustang. Now all i want is a new insight and achieve over 80mpg

01/01, 9:00 PM

posted by:

Mutant@DCX

改 善

01/01, 9:03 PM

posted by:

melias

If the US Banking industry doesn’t take the $714-billion bailout funds and start to loosen up the lines of credit so people can buy cars again, this crisis could become all-encompassing, even dragging down Honda and Toyota.

Where is the oversight over the banking industry? Congress is putting all sorts of stipulations as to how the big three must behave, but have imposed none of the same on the bankers.

Perhaps everyone should pull their funds from the banks and instead join a credit union.

01/01, 9:41 PM

posted by:

DetroitWatcher

melias… You hit the nail right on the head. Did anyone notice that immediately after GMAC go their loan, financing terms eased so that more people could buy cars. Ummm… have the other banks, who got bailed out MONTHS ago done anything but hoard our tax dollars??

01/01, 9:56 PM

posted by:

DrFill

A lot of dreams of a future day of reckoning for the Smart 2
But all for naught
Contingencies will cost more, but protect from major difficulty
How ’bout them Cowboys?
DrFill

01/01, 10:21 PM

posted by:

johnnycanuck

It’s easier to pick on the D3 because there are only 3 of them. If they tried the same tactics with your financial institutions the hearings would have to be held in FedEx Field.

01/01, 10:30 PM

posted by:

peteydog

Honda and Toyota are doing what they have to do to make sure they can continue to sell cars regardless of GM and Chrysler. Unfortunately, this is the trend in more than just auto industry. Many industries are now re-strategizing so that they can be less dependent on the US market. It is true that no one has confidence in the US now…

01/02, 5:54 AM

posted by:

Ramatai

Every large exporter is dependent on the US market and will continue to be for the foreseeable future. China, Japan and Germany are suffering from recessions. The service sector which the UK and US have a large reliance on is in a rapid plunge, really rapid at the moment. I think the US market was hit first and the rest of us will take a bounding (UK already has) over the next few months/years. Germany is more interesting because it is in recession but has no control over interest rates, so will struggle to perk up it’s own economy.

The banks aren’t exactly receiving money, they are getting US government debit in exchange for mortgage debit. Comparing their bale out to the auto industry’s is nonsensical, especially as the prime object was for the bank bale out was a freeing up of the housing market and corporate finance. In fact you could say this situation would not be this bad if Lehmans hadn’t gone bust. It’s left banks afraid to loan money to each other, which in turn has tied up the money markets and reduced credit facilties. Banks are only just starting to open up credit markets and I doubt things will return to normal for a while yet. Spreads on loans between banks are still large and insuring credit defaults between banks is also expensive.

01/02, 9:23 AM

posted by:

Gundy

Melias, I 100% agree with your comments about the crooked banking system in the US. They have no rules, it’s like the wild west with those clowns. “Oversight? We don’t need to have any oversight, WE DON’T NEED ANY STINKIN’ OVERSIGHT!”.. (to paraphrase Treasure of the Sierra Madre).. I don’t trust the Federal Reserve system either, it was pushed through Congress in the early 1900’s and is “owned” by a group of robber barons and bankers (JP Morgan, Rockefeller, etc). They cause the 10-year cycles in the economy so they can buy low and sell high. The American workin’ man and woman breaks their backs making this country go, and they use our labor to make trillions of dollars for themselves and their private islands. Not to go all conspiracy-theory or anything…

01/02, 9:32 AM

posted by:

hummah

You see, this is why the Japanese manufacturers are KILLING the big three. They have the ability to see farther ahead than the next quarter or the next shareholder meeting… I don’t ever recall hearing about contingency planning anywhere in Detroit.

01/02, 11:27 AM

posted by:

Bubs Solo

To iluvamcars
Honda makes nice looking cars, don’t categorize them with Toyota because Honda is superior in every department just check kbb.

To the media and everyone else who does it. Stop saying the “Big Three” all of the time. Ford did not ask for bailout money. Ford did not need bailout money. Ford did not receive bailout money. Ford is not in bankruptcy trouble. So for the love of Pete stop categorizing Ford with the two companies with the uncertainty.

01/02, 1:33 PM

posted by:

yarddog82abn

My sister went to a Honda dealer, and tried to get a Honda Accord, her offer was $1,000.00 DOWN and $350.00 PER-MONTH for 36mo. they said No…. She walked across the street to a Benz Dealer, she drove off the lot with a new C Class for $1,000.00 DOWN & $350.00 PER-MONTH of 27mo. The sticker on the Benz was $32K and the Honda was $29K, same fishers car vrs. car. Money factors, residual’s, dealer hold backs, Tax, Lic. all of that was way better for the Benz, and her insurance was the same for ether car… And now she drives a Benz…. What a way to lose a sale…..

01/02, 1:35 PM

posted by:

yarddog82abn

I forgot to say it was a lease…

01/02, 2:54 PM

posted by:

Mutant@DCX

The original kanji characters for this word are: 改 善

In Japanese this is pronounced “kaizen”.

改 (”kai”) means “change” or “the action to correct”.
善 (”zen”) means “good”.
In Chinese this is pronounced “gai shan”:

改善 (”gǎi shàn”) means “change for the better” or “improve”.
改 (”gǎi”) means “change” or “the action to correct”.
善 (”shàn”) means “good” or “benefit”. “Benefit” is more related to the Taoist or Buddhist philosophy, which gives the definition as the action that ‘benefits’ the society but not one particular individual (i.e., multilateral improvement). In other words, one cannot benefit at another’s expense. The quality of benefit that is involved here should be sustained forever, in other words the “shan” is an act that truly benefits others.

25 years they have been making us use Kanban (in kanji 看板 also in katakana カンバン, where kan, 看 / カン, means “visual,” and ban, 板 / バン, means “card” or “board”) is a concept related to lean and just-in-time (JIT) production. The Japanese word kanban (pronounced [kambaɴ]) is a common everyday term meaning “signboard” or “billboard” and utterly lacks the specialized meaning that this loanword has acquired in English. According to Taiichi Ohno, the man credited with developing JIT, kanban is a means through which JIT is achieved.

Kanban is a signaling system to trigger action. As its name suggests, kanban historically uses cards to signal the need for an item. However, other devices such as plastic markers (kanban squares) or balls (often golf balls) or an empty part-transport trolley or floor location can also be used to trigger the movement, production, or supply of a unit in a factory.

It was out of a need to maintain the level of improvements that the kanban system was devised by Toyota. Kanban became an effective tool to support the running of the production system as a whole. In addition, it proved to be an excellent way for promoting improvements because reducing the number of kanban in circulation highlighted problem areas.

01/02, 4:20 PM

posted by:

cereal

YAWWWN.

LLN, this should have been published earlier. Why? I forget.. I feel this was already evident many weeks ago.. I think.

In any case- it’s true. It’s here. And mostly, the whole fall of the D3 (or two of them for now) is in the hands of America at this point. Foreign auto makers like Toyota and Honda can only save themselves. Although it might be possible to help out the D3 by stop production flows into America.. (like that would help much) but I don’t see pigs flying, nor is it snowing in hell yet.

-eat your cereal

01/02, 4:24 PM

posted by:

1ofthegoodguys

Ramatai – If you want to say that the $700 billion in bailout money was given to the banks for the housing crunch and by them gettig the money won’t help out the average joe’s borrowing money because it has nothing to do with the other. I say horse pucky! Once these big banks started losing money in the mortgage mess, they started reigning back on their auto loan process. There are countless banks who have “suspended” (closed) their auto lending branches because of these tough times. It’s because they are still afraid of losing more money on mortgage loans in the very near future, they are simply hording the money in fear of not getting any more.

hummah – if Toyota & Honda were so insightful, then we did they spend milliions on top of millions to develop below average FULL size trucks & SUV’s to compete with the Detriot 3. They should have just looked into their crystal ball and seen the recession coming. I think it’s about time that we all realize that they are just people working at those companys. It’s all a gamble as to what to do next. One roll of the dice is luckier than the other. All of the automakers sales are down. Regardless of who owns them, where they are made, or who running their sweat shops.

To everyone else that thinks Toyota/Honda make more fuel efficeint vehicles – (as well as better built vehicles, etc.) – STOP BELIEVING EVERYTHING YOU SEE ON TV AND ON THE INTERNET. Do your own research!

01/02, 8:45 PM

posted by:

DrFill

Done!
Yup, still whuppin a$$ and picking up market share!
Give me sumpin’ challenging

Ford F-150 still weases like an astmatic pulling a 10k load
Tundra whistles while it works
F-150 is losing share left and right because it’s so boss?
DrFill

01/03, 1:06 PM

posted by:

Bubs Solo

DrFill

Ford is actually gaining the market share(recently).
Here is a challenge.
Do some research before your next post.

Bubs Solo

 
 
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