This week, a prominent auto parts supplier experienced an explosion at one of its factories in central Japan, injuring four people. News of such an incident of supply chain disruption would not be considered unusual in these times of global-wide supply chain activities. However, considering the Japan location and the major automotive OEM customer being Toyota, it may well be noteworthy.
The factory where the explosion occurred was operated by Aisin Advics Co.is a major supplier to Toyota Motor for automotive braking systems. The explosion occurred at the supplier’s production plant located in Kariya, Aichi Prefecture, near one of its paint lines. On Monday, the supplier indicated that it was still in the process of evaluating the extent of the damage which had the potential to impact the supply chain of its customers.
As Supply Chain Matters and other business media has indicated, Toyota had already suffered production delays as a result of two major earthquakes that impacted southern Japan in April. A body factory and a die-casting plant, both operated by Aisin Seiki Co., and located in Kumamoto region, were damaged as a result of the quakes, and Toyota had to suspend nationwide production operations for upwards of a week because of this disruption. A fire at a steel production plant operated by Aichi Steel Corp. also impacted Toyota.
Coincidentally, Aisin Advics is owned by Aisin Seiki Co. and thus may well be versed in supply chain risk mitigation and business continuity planning..
The overall impact of the April earthquakes came to more light this week in the release of the Nikkei Japan Manufacturing PMI for May. The May reading of 47.7 in production and manufacturing activity represented a 40 month low. According to the panelists that are polled by Markit Economics, the earthquakes had a detrimental effect on production output prompting an economist to indicate:
“The aftermath of the earthquakes in one of Japan’s key manufacturing regions continued to weigh heavily on the goods producing sector.”
Depending on the extent of damage involved in this latest factory fire incident, the Japan automotive manufacturing sector and specifically Toyota will have another supply chain business continuity effort underway in the coming days.