Japan's factory output rebounds

29 June 2011 Last updated at 02:17 GMT Car production was hit badly due to a shortfall of parts following the earthquake and tsunami Japan's factory output rose at a faster-than-expected pace in May as the economy continued to recover from March's earthquake and tsunami.

Japan's industrial output jumped by 5.7% in May, compared with the previous month, the latest government data showed.

The twin disasters had damaged factories and caused disruption to the country's supply chain.

This is the second successive month that industrial output rose in Japan.

"As supply chains recover from the damage caused by the March earthquake, output is showing a strong recovery, mainly in cars," said Yuichi Kodama, of Meiji Yasuda Life Insurance.

'Downside risk' Some of the biggest Japanese manufacturers had to suspend or curb production after the earthquake and tsunami, due to a shortage of parts and electricity supply.

While an improvement in the supply chain has eased the parts shortage, power cuts still remain a big concern for manufacturers, not least because of peak consumption during the summer months.

"The prospect of power shortages in the summer is making companies cautious about the outlook," said Mr Kodama.

Analysts also warned that if a solution to the power crisis is not found quickly, it may have an adverse affect on the overall economy.

"Longer-term, power constraints are a downside risk to the economy as more companies may decide to shift their production overseas, which would weigh on Japan's potential growth rate," said Yoshiki Shinke, of Daiichi Life Research Institute.

Back on track

One of the sectors worst hit by the twin disasters was Japanese car manufacturing.

A shortage of parts coupled with power supply constraints saw leading manufacturers like Toyota and Honda suspend production at their factories.

However, the latest production numbers show that the pace of decline at Japan's car manufacturers is slowing down.

On Tuesday, Toyota reported that its domestic production in May fell by 54.4%, compared with the same month last year. Last month it reported a 74.5% drop.

Honda said its Japanese factories produced 53.4% fewer cars in May. Its output had plunged by 81% in the previous month.

Meanwhile, Nissan said production at its domestic factories actually increased by 0.8% in May, compared with a 48.7% drop in the previous month.

Analysts said that the recovery in the sector had been faster than they had expected.

"Carmakers have been able to recover very quickly from the loss of output after the earthquake," said Shuji Tonouchi, of UFJ Morgan Stanley Securities.

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Japan car firms hire to up output

21 June 2011 Last updated at 06:17 GMT Japanese car makers have been suffering a shortage of parts and therefore operating at reduced capacity Japanese car firms will boost production by hiring thousands of contract workers in the aftermath of the March earthquake and tsunami.

Toyota Motors has said it will take on up to 4,000 workers starting in July, after a plunge in Japanese production of almost 75% in April.

Honda said it will hire about 1,000 contract workers and Nissan about 200.

Japan's car makers have been facing supply chain disruptions and power shortage problems since the disaster.

Toyota said that in Japan it will be back to 90% pre-earthquake production levels in June and close to 100% from July onwards.

"By July we'll be back at monthly production levels. But we still have to make up for those units we lost over the last couple of months," said Toyota spokesman Dion Corbett.

"This [hiring] drive is primarily to make up for lost production."

The sentiment is echoed by the other car makers.

Honda, which also saw a dive in production after the earthquake, said it was hiring on 3-months contracts.

"When production went down to 50% we had stopped some contracts for some temporary workers. Therefore to increase production, we are increasing hiring," said spokesperson Akiko Itoga.

The 9.0 magnitude earthquake and subsequent tsunami destroyed entire towns and disrupted electricity-generating facilities, including the Fukushima nuclear power plant.

This led Japanese car firms to announce production disruptions, both domestically and overseas, because of plant closures and slowing output.

Toyota forecasts it will suffer 450,000 units of lost production this fiscal year which ends on March 31, 2012, according to Mr Corbett.

Approximately 220,000 units of Toyota and Lexus production were lost globally between March 11 through to the end of that month.

Therefore. the global impact of the earthquake on Toyota is approximately 670,000 units.

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Supply problems hit UK car output

19 May 2011 Last updated at 11:58 GMT Honda cut production at its factory in Swindon Car production in the UK fell sharply last month, hit by supply shortages following the disruption caused by Japan's earthquake and tsunami.

Production in April totalled 86,306 vehicles, down 7% from the same month last year, said the Society of Motor Manufacturers and Traders (SMMT).

The three main Japanese carmakers - Toyota, Honda and Nissan - all have factories in the UK.

Honda halved output at its Swindon plant last month due to shortages.

Despite April's weak showing, the SMMT said UK car production for the first four months of 2011 was still 7% higher than a year earlier, rising to 443,536 units.

It said this was thanks to production for exports rising 23%, while output for the domestic market fell 35%.

SMMT chief executive Paul Everitt said: "All manufacturers are working hard to overcome supply shortages and we expect any downturn to be short lived.

"The outlook for the UK motor industry is extremely good and this should generate new opportunities for vehicle manufacturers and suppliers."

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