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Japan crisis could prompt Indiana auto layoffs

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INDIANAPOLIS (AP) — Shortages of auto parts from earthquake-stricken Japan could lead to layoffs at some Indiana factories in the coming weeks.

Business analysts don't expect large cutbacks, but anticipate that some Indiana plants that employ about 50,000 autoworkers will use short workweeks, scattered short-term layoffs and slower line speeds to keep workers busy during the downturn.

"I'm not sure it's going to be a major event. It's not clear yet," said economist Thomas Klier of the Federal Reserve Bank of Chicago told The Indianapolis Star. "We still don't know what the extent of the damage actually is in Japan."

Trying to determine which plants might be affected by the tumult in Japan is made difficult by the global supply chain that has developed in recent years. Subaru, Toyota and Honda assemble vehicles in Indiana, but the supply system runs to almost every major automaker.

Almost all of the ships that left Japan for the United States before the March 11 earthquake and tsunami should reach port by next week. But it could take three or four weeks for the disruption in shipping to affect a U.S. auto-parts supplier.

"It only takes a shortage of one part (to bring down an auto plant). No one knows what part it's going to be," said Alan Jones, vice president of Muncie-based Mursix Corp., owner of auto-parts maker Twoson Tool in Muncie and Dakota Engineering in Indianapolis.

Officials at Toyota's factory near Princeton in southwestern Indiana, where 4,100 workers assemble minivans and sport utility vehicles, announced Thursday that some "nonproduction days" are likely. Toyota avoids layoffs and usually assigns crews to maintenance and training tasks.

"We're having to assess our suppliers' condition in Japan," Toyota spokesman Mike Goss said. "It's a big job. There's a lot of companies in Japan, several tiers, several layers of suppliers. It's not been an easy task."

Subaru of America said last week it was suspending overtime at its only North American plant in Lafayette, as it assessed its ability to get parts from Japan. The 3,300-worker factory makes the Outback wagon.

Honda, which has a factory in the southeastern Indiana city of Greensburg, hasn't announced any North American production changes.

When a slowdown finally happens in Indiana, it may come abruptly to auto-parts suppliers, which operate dozens of plants in the state.

Because of the global supply system, "an automaker is not going to be able to tell you with any advance notice that they are running out," said analyst Jim Gillette in the Grand Rapids, Mich., office of market researcher IHS Automotive.

If there is a parts shortage, layoffs might not be immediate.

"I'd guess we could go a couple of months before we have layoffs," said Randy Hampton, business unit manager at auto-parts maker PMG Indiana in Columbus. "If this goes long-term, we'd have to look at layoffs, but we'd look at this more as an opportunity to build inventory. The auto industry has been so good the last few months there's hardly any inventory left."

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Information from: The Indianapolis Star, http://www.indystar.com

 

Posted 3/25/2011

 

 

 

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