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Honda will slash production because of new parts shortage

October 31, 2011 | 10:12 am


Honda will cut production of cars at its North American factories because of parts shortage caused by flooding in Thailand.

Just as Honda was recovering from a production disruption and inventory shortage caused by the Japanese earthquake, it has been hit with another natural disaster –- flooding in Thailand that is causing a parts shortage.

Honda says it will slash production at its U.S. factories by half through Nov. 10 and shutter its factories for a day on Nov. 11. It also has cut all overtime production for November.

About 87% of the Honda and Acura automobiles that the automaker sells in the U.S. are assembled here.

Most of the parts come from North American suppliers, but Honda said it also buys “a few critical electronic parts” from Thailand and other regions of the world.

Honda said it is working with suppliers in Thailand and elsewhere in its network to resume production of the parts it needs for its North American factories.

Honda said it will try to help out its U.S. factory workers by counting any “non-production days” as “no pay, no penalty” days. That means Honda employees can report to work, use a vacation day, or take the day off without compensation or penalty.

Honda’s U.S. sales have slid 6% to just under 860,000 vehicles so far this year. It’s share of the U.S. market has slid to 9% from 10.6%.  A portion of the decline has come from the shortage of vehicles it had available for sale caused by the parts shortages from the Japanese earthquake and tsunami in March.

Meanwhile, Honda said that its net profit for its fiscal second quarter ending in September fell 56% to 60.4 billion yen ($788 million.) Revenue slid 16% to 1.885 trillion yen ($24.6 billion.)


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Photo: 2012 Honda Civic. Credit: Honda Motor Co.