Toyota Motor Corp. (TM) revealed that it will undertake one-day production shutdowns at all its plants in North America, except Georgetown, Kentucky, due to the earthquake and tsunami in Japan on March 11 that damaged many parts supplying companies’ plants, leading to a shortage in components supply. The one-day shutdowns will begin April 15 and end April 25.
The production shutdowns will take place on April 15, 18, 21, 22 and 25 at its 13 North American vehicle plants, except at Georgetown. Most of the company's engine and component plants in the region will follow the same schedule.
Production at the Georgetown plant will be halted for 4 days. It manufactures the popular Camry as well as the Avalon and Venza vehicles.
The temporary shutdowns will affect 25,000 workers. However, the automaker denied of any layoffs at the plants.
Nearly 70% of vehicles sold in the U.S. by Toyota are produced in its North American plants. About 75% of their parts are sourced from roughly 500 suppliers in North America and the rest 15% from Japan. The U.S.-made models include Camry and Avalon sedans, manufactured in Georgetown, Kentucky, and the Corolla sedan, produced in Ontario
Few days back, Toyota announced that it will resume production at all its plants in Japan at half capacity from April 18 to 27. The automaker suspended its production at all the 18 plants in Japan from March 14 to 26.
Production resumed at only two plants in Japan since March 28 that build Toyota and Lexus cars. Those plants are assembling a limited number of three hybrid models at a reduced rate. Production at those plants account for only 3%–4% of normal capacity.
The disaster has resulted in a production loss of 260,000 cars from March 14 to April 8 for Toyota. The automaker is still struggling to procure about 150 types of parts. Previously, it faced shortages of about 500 types of components.
Toyota stated that it will again halt production at all its plants from April 28 to May 9. The period is considered as Golden Week holidays when factories would normally close.
Recently, Moody's Investors Service, the credit rating agency operated by Moody's Corp. (MCO), warned that it may downgrade its credit rating for Toyota due to the disaster that will adversely affect the financial results of the company.
Currently, Moody’s set Toyota's long-term uncollateralized debt rating at Aa2. The rating agency will review Toyota’s credit rating based on its ability to restore production in Japan.
Almost all the Japanese automakers, including Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY), are plagued by the natural disaster in the country. They have suspended and cut down their production in the wake of plant outages and parts supply shortage.
Toyota, a Zacks #3 Rank (Hold) stock, posted a 39% fall in profit to ¥93.63 billion ($ 1.14 billion) or ¥29.86 (36 cents) per share in the third quarter of fiscal 2011 from ¥153.22 billion ($ 1.86 billion) or ¥48.86 (59 cents) per share in the year-ago quarter. The fall in profit was attributable to lower sales in the Japan, North America and Europe as well as stronger yen.
Consolidated revenues in the quarter dipped 12% to ¥4.67 trillion ($ 56.74 billion) on the back of a 13% fall in global sales volume to 1.8 million units. Vehicle sales declined 21% to 507,861 units in North America, 31% to 402,476 units in Japan and 5% to 207,621 units in Europe. Meanwhile, sales rose 21% to 334,504 units in Asia and 2% to 349,219 units in Other regions.
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