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Steel shortages threaten Nissan shutdown

The ongoing steel crisis at Nissan Motors may force the company to reduce production by a further 15,000 vehicles in March on top of the 25,000 that have been lost from the closure of most of its Japanese plants for five days, Carlos Ghosn, president and CEO, warned today.

Despite securing additional steel supplies from South Korea and France, output could still be hit. March is the month that demand for new vehicles in Japan usually hits the peak and Ghosn predicted that other Japanese carmakers might also have to halt or slow production as a result of steel shortages.

Nissan has been forced to close three of its four plants in Japan for five days after running out of steel. The loss of a total of up to 40,000 units by March is equivalent to around 3% of forecast annual domestic production of 1.43m units and will cost the company around Y16bn (£80.7m) in profit.

Ghosn admitted the company made mistakes in its steel procurement but added it had saved around Y1,000bn in costs since 2000 and that this compared favourably with the Y16bn that could be lost from the reduction in production.

“We will not be the only ones,” Ghosn said.

A spokesman for Toyota said the company was not expecting any problems in March, but was taking action to reduce the amount of steel its uses in its cars.

A spokesman for Honda said none of its factories had slowed down their production lines and added that “at this point there has been no effect” as a result of steel supply problems.

(Source: ft.com)

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