Gas Explosion Halts Toyota’s Production

Without steel, Toyota is forced to stop the assembly lines for a week.

Toyota Steel Shortage

Toyota famously pioneered the practice of Just-In-Time manufacturing. The idea: Don’t keep parts in inventory, where the stuff gathers dust and costs money. Only make what you need, and keep your “inventory” on the rails, synchronized with production, coming into and moving out of factories in the form of rolling stock. The Big Three, and all global automakers, now follow this model to a great extent.

Then something like the 2011 earthquake and tsunami hit Japan, and a few weak links in the supply chain cause the entire system to unravel. And then you can’t make cars. In that case Toyota was hardly alone: Honda and Nissan were also hurt fairly badly.

But an early January gas explosion at Aichi Steel, one of Toyota’s suppliers, and the subsequent shutdown of its facilities (likely until late March) is forcing Toyota to halt production on all domestic assembly lines for a week in the middle of February.

While exports from Japan to North America are shrinking, with most production happening stateside, a number of Toyota, Scion, and Lexus models are still produced overseas. That includes the Prius and the Lexus NX, as well as some SUVs, like the 4Runner.

Toyota says it’s looking at other steel sources, possibly from Aichi’s other plants; the main factory says it won’t be able to repair the gas explosion damage for well over a month. The world’s largest automaker has serious some pull, so expect them to figure this out, but also to miss some sales targets.