North American auto plants start feeling squeezed

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North America's auto industry is starting to feel the effects of the crisis in Japan, even as that country's hamstrung vehicle makers work feverishly to ensure their overseas production lines keep humming.

The overwhelming devastation caused by last week's massive earthquake and tsunami continued to stymie the efforts of auto companies to assess the state of their parts inventories on Wednesday, causing the disaster to hit home for their North American workers.

At the same time, the appreciating Japanese yen is casting a pall over the auto industry's future export prospects in North America - an added blow to a country still struggling to avert a nuclear disaster.

Toyota Motor Corp. , the world's biggest auto maker, is indefinitely suspending overtime and Saturday production at all of its North American assembly plants - including two in Canada - to conserve parts and give its staff enough time to properly assess inventories.

"With all of the difficulties in Japan including communications, electricity, transportation - it's taking a long time to gather that information," said Pat Clement, a spokeswoman for Toyota Motor Manufacturing Canada Inc.

The auto maker has about 6,200 employees at its assembly plants in Cambridge and Woodstock, Ont., as well as its aluminum wheel plant in Delta, B.C. Regular production continues at all its Canadian operations but officials concede the situation remains fluid.

Toyota also announced it would extend production halts, which began on Monday, at its Japanese car plants through March 22, affecting about 95,000 vehicles. It plans to restart production Thursday at Japanese factories that make replacement parts.

In addition to maintaining the confidence of customers, Toyota is scrambling to keep its overseas production lines moving. It plans to resume Japanese production of parts for overseas production next Monday.

Some of those parts may already be made and waiting to be shipped but it is still unclear how much respite these moves would provide to Toyota's North American operations. "It is the beginning of the efforts to get back on track," Ms. Clement said.

Subaru confirmed that it, too, has halted overtime production and weekend shifts at its plant in Lafayette, Ind., which makes the Legacy and Outback models. Its Japanese plants will remain shuttered until Sunday.

Auto analysts say the appreciation of the Japanese yen against the U.S. dollar is hampering the industry's longer-term outlook in North America by driving up the cost of exports.

"The real impact on the North American vehicle market will more likely be determined by the impact on the value of the yen," Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., said in an e-mail.

The United States is the biggest export market for Japanese cars, making it the most sensitive to the yen's appreciation. The U.S. imported 1.2 million Japanese vehicles in 2009, according to the Japan Automobile Manufacturers Association.

"One of the last things they need right now is the currency wreaking havoc and serving as a headwind to the export industry, just given the economy is going to be struggling through this period of reconstruction," said George Davis, chief technical analyst at RBC Dominion Securities Inc.

Also Wednesday, Mazda's production shutdown in Japan was extended to Sunday. So far, its plant in Flat Rock, Mich., which produces the Mazda 6, remains unaffected.

A shortage of parts from Japan's devastated northeastern region are continuing to hamper Honda Motor Co It has suspended production at six Japanese plants through the end of the week, along with a research and development centre and an engineering office. The production cuts will affect 16,600 vehicles and 2,000 motorcycles. Honda's two Canadian plants, however, continue to operate as normal.

Mitsubishi Motors Corp.'s three Japanese plants are in operation, using inventory parts. Its plant in Normal, Ill., is still running as usual.

Nissan Motor Co. said it is resuming production at two car assembly factories on Thursday and Friday for as long as its inventory of parts lasts. Three other Nissan plants are suspending production until Sunday. The company said all North American manufacturing plants will continue to operate on schedule.

With files from Associated Press