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When Kaoru Eguchi, deputy general manager of Nissan's Iwaki plant, saw the damage after the March earthquake, he thought the plant was finished. (Junko Kimura for The Globe and Mail/Junko Kimura for The Globe and Mail)
When Kaoru Eguchi, deputy general manager of Nissan's Iwaki plant, saw the damage after the March earthquake, he thought the plant was finished. (Junko Kimura for The Globe and Mail/Junko Kimura for The Globe and Mail)

After a year of disasters, Japan's auto sector fights back Add to ...

So began an extraordinary collaboration by companies that normally fight each other for sales.

The executives soon found there were problems at plants that produced 500 separate parts. Semiconductors, rubber components and chemicals that served as raw materials for some parts were in critically short supply.

In Iwaki, the call went out to other Nissan plants and suppliers for help. About 200 people from the plant’s own work force, another Nissan factory and a supplier showed up the Monday after the quake and began repairing wiring, plumbing, ceilings and floors.

The situation at Iwaki was complicated by the explosion at the Fukushima nuclear plant about 100 kilometres away. Iwaki municipal government officials ordered employees to remain in their homes.

Truckers refused to drive into the area to deliver food and fuel. So Daisuke Kinugasa, manager of the plant’s administration section, and other managers decided to ration to employees the gasoline that is normally used to fuel five-minute idling tests on every engine the plant produces.

Teams worked to restore operations in separate departments such as machining, casting, cylinder heads and crankshafts and began competing with each other to restore their section of the plant more quickly, Mr. Eguchi recalled.

By April 11, the plant was ready for limited production when a 7.1-magnitude aftershock rattled the area, opening up cracks on the floor that had already been fixed and damaging other parts of the plant that had been repaired.

“We needed to start from scratch once again,” Mr. Eguchi said.

The good news was that by mid-April at Nissan’s headquarters, cross-functional teams from purchasing, engineering, research and development had made progress on shrinking the list of unavailable parts. More suppliers had come on stream, and Nissan officials were able to get better information from others.

To get a final determination of what parts might still be a problem, Mr. Shiga said they decided to start vehicle assembly again. That would mean suppliers would have to ship parts. If they weren’t able to, Nissan would know exactly where to focus its attention.

It became clear that one commodity the auto makers were desperately short of was microcontrollers, the chips that send electronic signals from the accelerator to the carburetor and the brake pedal to the brakes. There are four chips that control just the functions in a car door.

The cheapest car has 100 chips and high-end vehicles such as those sold by Toyota’s luxury Lexus division and by Mercedes-Benz and other luxury brands have 400 to 500 chips, said Shuichi Inoue, general manager of the process technology division of Renesas Electronics Corp.

As the largest supplier of microcontroller units to auto makers in Asia, including Japan, Renesas has about 35 per cent of the market. Its plant in Naka, about mid-way between Tokyo and Iwaki, was severely damaged.

Because of widespread rebuilding throughout Japan, Renesas was unable to get drywall to rebuild the “clean room” at its Naka plant, where microcontrollers are fabricated in a high-technology process and a sterile environment. It was also having trouble getting water pumps to replace those that were damaged during the quake.

So the auto makers collaborated again, using their size and muscle to get Renesas the drywall it needed to rebuild the clean room, Mr. Inoue said.

The co-operation between rivals extended into the summer when the Japanese government ordered a number of industries to stagger their production to cut down on electricity demand. The auto makers agreed to shut their plants and offices on Thursdays and Fridays through the summer and have them operate on Saturdays and Sundays instead.

The level of teamwork within Toyota impressed Jeffery Liker, a University of Michigan professor who has written several books on the company.

“It was remarkable how within one month they went from 500 parts missing to 100 parts that they couldn’t account for,” said Prof. Liker, who doubts that U.S. auto makers would have been able to recover as quickly from a similar disaster.

He ascribes it in large part to culture. “I’ll give you an equation,” he said. “It’s culture, times technical knowhow, times absolute will.”

Lessons learned, future challenges

Another guiding principle of Japanese auto makers is to learn from adversity, and they are already trying to implement some of the lessons of 2011.

The twin disasters of the earthquake and the Thailand flooding have given them a much more extensive and intricate knowledge of their supply base, an understanding that was previously confined to direct suppliers but now extends down to the third- and fourth-tiers. Executives hope this means that after the next earthquake, they won’t have to spend weeks or months finding out what part comes from which plant located where.

They are requiring some suppliers to keep slightly more inventory on hand than they do now. They will also insist that suppliers have the capability to move tools and dies to another factory to produce parts if a plant producing those parts is damaged.

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