DTI News

June 14, 2024
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Major setback for Toyota: Production halted at all 14 Japanese plants

Tokyo: Toyota Motor Corp (7203.T), the world’s largest-selling automaker, has encountered a significant setback as it announced the suspension of operations across all 14 of its assembly plants in Japan. This unexpected move comes as a result of a malfunction in the production system, effectively bringing domestic output to a standstill.

According to the Reuters, The malfunction has hindered Toyota’s ability to place orders for crucial components, prompting an immediate investigation into its root cause. However, company spokespersons have asserted that the issue is “likely not due to a cyberattack,” dispelling concerns of malicious digital interference.

The suspension unfolded in stages, with 12 plants being brought to a halt starting from the morning of Tuesday. The remaining two plants were suspended later in the day. Despite the swift response, the extent of the impending output loss remains uncertain.

Remarkably, the collective output of these plants constitutes approximately one-third of Toyota’s global production capacity, according to calculations by Reuters. This unfortunate event disrupts Toyota’s resurgence in domestic production, which had seen a remarkable 29% surge in the first half of the year. This boost marked the first significant increase in output after grappling with semiconductor shortages.

While Toyota has previously encountered production halts due to cyberattacks on suppliers, last year’s setback led the company to adopt contingency measures through a backup network to resume operations.

As the ramifications of the suspension unfold, experts and analysts speculate on Toyota’s strategies to counteract the potential loss in output. Measures such as increasing operational shifts could be considered to mitigate the impact.

Reports indicate that Toyota’s Miyata plant located in Fukuoka’s southern prefecture might be on track to restart operations soon. However, specific timelines for resuming production at the facility remain uncertain.

The ripple effects of Tuesday’s production suspension are evident. Toyota Industries (6201.T), a group subsidiary, reported a partial suspension of operations at two engine plants due to the cascading effects of the automaker’s malfunction.

Toyota’s production methodology, known for its just-in-time inventory management, is renowned for its efficiency and cost-effectiveness. However, such a system also exposes the company to supply chain disruptions, ultimately jeopardizing production schedules.

While the exact cause of the malfunction remains enigmatic, corporate Japan remains on high alert due to a recent spate of harassing phone calls received by businesses and government offices. Authorities suspect the calls to originate from China and speculate that they might be related to Japan’s release of treated radioactive water from the Fukushima nuclear power plant into the Pacific Ocean.

In the stock market realm, Toyota’s share price witnessed a marginal decline of 0.21%, settling at 2,431.5 yen by the end of trading after experiencing deeper negative fluctuations earlier in the day.

Source: Google News

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