The global microchip shortage dragging on the auto industry has put barely a dent in production at Toyota, the world's biggest automaker, thanks to lessons it learned after Japan's 2011 tsunami disaster.
While the latest crisis caused by skyrocketing demand for semiconductors has forced global car makers to revise production plans, Toyota exceeded its sales targets this year and expects to sell even more units in the next 12 months.
Its success lies in part, experts say, in its decision to prepare extensively for disruptions after the experience of Japan's devastating earthquake, tsunami and nuclear crisis 10 years ago.
The catastrophe left parts of Japan's industry on its knees for months, especially vehicle makers, whose domestic supply chains were thrown into turmoil.
Toyota suffered like its rivals and took six months to return to normal production, but the firm resolved not to let the same thing happen again.
"Toyota learned the lessons of the 2011 earthquake probably better than anybody," said Christopher Richter, an auto expert and managing director at the brokerage CLSA.
The Japanese giant reviewed all its suppliers, even the most indirect, giving it a better understanding of its supply chain and allowing it to react quicker in times of crisis.
Faced with a global semiconductor shortage this year, "they were just way better prepared than any other automaker in the world", Richter told AFP.
A source close to another Japanese carmaker agreed.
"We all took steps like that post-Fukushima, but Toyota did it best, and kept it up," he said, referring to the nuclear plant that was crippled by the tsunami.
The global auto industry has faced serious headwinds during the pandemic, with lockdowns fuelling declining sales, and a shortage of the chips used in modern vehicles has only compounded the woes.
A surge in demand for home electronics that use semiconductors, as well as a US cold snap, a drought in Taiwan and a fire at Japan's Renesas manufacturer have created a perfect storm throttling chip supplies.
– Loyal suppliers –
Toyota was a pioneer of the widely used "just-in-time" production model — where stockpiling is kept to a minimum to reduce costs.
But as soon as it spotted the first signs of a chip shortage, the firm switched things up.
"Toyota was the first automaker to adjust its supply chain management system from a purely 'just-in-time' model to a hybrid model where it stockpiles more of the critical components such as semiconductors," said Joshua Cobb, an auto analyst at Fitch Solutions.
"Toyota has always been a leader in developing supply chain management systems, and other automakers tend to follow Toyota's lead," Cobb said.
German auto giants Volkswagen, BMW and Daimler, and their US rival General Motors, have all recently announced that they will change their supply and stockpiling systems to build up more reserves.
But Japanese firm had a head start, and another crucial advantage: most of its suppliers, including chipmakers, are Japanese companies, which will "prioritise supplying Toyota", Cobb said.
Toyota often holds shares and sometimes controlling stakes in these firms, so it has "greater control" over the situation, he added.
"This differs from other automakers, specifically European and American automakers which source most of their components from Asian companies," Cobb told AFP.
An industry source said Toyota also prioritises good relations with suppliers, ensuring consistently solid sales and pledging not to renegotiate fees after a contract has been signed.
All these factors mean Toyota often comes out on top.
"If we receive orders from several clients at the same time, we have to prioritise the most powerful and stable," said the source.
Announcing its earnings Wednesday, Toyota could point to the fruits of its preparations, surpassing its sales target with 9.9 million vehicles sold by all its brands in the financial year to March.
It is now targeting total sales of 10.5 million units in 2021-22.
New tech coalition seeks US aid to respond to chip shortage
Washington (AFP) May 11, 2021 –
A newly formed coalition of technology firms called Tuesday for $50 billion in US government aid to boost incentives for domestic semiconductor manufacturing in the face of a deepening chip shortage.
The Semiconductors in America Coalition urged Congress to allocate funds for research and manufacturing, calling the effort essential for economic and national security.
The coalition — which includes giants including Apple, Microsoft, Google, Amazon, AT&T and Verizon and several dozen other firms — said it seeks funding for the CHIPS for America Act, which was passed by lawmakers earlier this year but without funds appropriated.
"Semiconductors are the brains of the systems and technologies that enable America's economic growth, national security, digital infrastructure, and global technology leadership," said John Neuffer, president and chief executive of the Semiconductor Industry Association, whose member firms are part of the coalition.
"Leaders from a broad range of critical sectors of the US economy, as well as a large and bipartisan group of policymakers in Washington, recognize the essential role of semiconductors in America's current and future strength."
The shortage has added to a supply crunch for the technology sector and a variety of other manufacturing sectors including automotive as the economy emerges from a pandemic-induced slowdown.
"To address this problem in the short term, government should refrain from intervening as industry works to correct the current supply-demand imbalance causing the shortage," the coalition said in a letter to congressional leaders.
"But for the longer term, robust funding of the CHIPS Act would help America build the additional capacity necessary to have more resilient supply chains to ensure critical technologies will be there when we need them."
