Nissan is set to temporarily stop production at its Kyushu plant in Kanda, Fukuoka Prefecture, for two days because of disruptions in the Chinese parts supply chain. The factory is the first in Japan to shut down as a result of the coronavirus outbreak.
In a statement, the car company stated: “Due to supply shortages of parts from China, Nissan Kyushu in Japan will carry out temporary production adjustments on February 14 and 17.”
The company is also planning to extend the suspension of operations at its factories in China until at least Sunday.
Global reliance on Chinese supply chain
China is a manufacturing powerhouse and vital supply chain for the world’s automotive industry. Car brands across the globe rely on Chinese components to build their vehicles. As a result, many are now facing similar issues as most of China’s manufacturing sector remains closed to try to curb the spread of the virus.
Hyundai in South Korea had to close some of its factories due to a lack of essential parts while French automaker, Renault, also suspended production at its plant in Busan.
Many Chinese factories were scheduled to open on Monday after an extended Lunar New Year break. However, while some did reopen, many others remained closed due to local authority restrictions.
Car brands across the globe rely on Chinese parts to build their vehicles
Making a move to Southeast Asia
Some Japanese manufacturers have begun to move production to Vietnam and other countries in Southeast Asia. The measure was initially prompted by rising labour costs in China and the trade war between Beijing and Washington. However, the disruption firms are facing as a result of the coronavirus is forcing more businesses to consider relocating.
The move will mean companies will incur a temporary surge in cost. However, some firms can’t risk waiting until the virus is contained for supply chains to be restored.
Panasonic Corp. Chief Financial Officer Hirokazu Umeda said in a recent news conference that they “are preparing an alternative production plan outside China, especially for [their] (electronic) device products” in case the supply disruptions persist.
Auto parts maker, Aisin Seiki Co. is moving its production because delays in the delivery of parts would seriously impact its global operations.
Japanese tech is also enticing businesses back home
In the long term, small- and medium-size companies may opt to shift their China operations back to Japan. With advances in internet of things technology and robotics to resolve Japan’s ongoing labour shortage, Japanese businesses could take advantage of reduced labour costs if they relocate to their home country.
Makeup giant Shiseido is one of the most recent companies to return to their roots having built a new domestic factory in Otawara, Tochigi Prefecture, with further plans to open two more plants in Japan by 2022.
Have you or your business been affected by supply chain disruptions as a result of the coronavirus outbreak? Share your experience in the comments below.
"Otsumami" - a bite size snack:
Heavy reliance on parts from one source can cause major disruption to manufacturing companies.