The devastating tsunami and earthquake that hit Japan on March 11, 2011 stopped the mass production of Nissan vehicles. The automaker’s factories in Japan are located in the city of Iwaki 30 miles away from Fukishima nuclear plant. Carlos Ghosn, the chief executive officer of Nissan, decided to close the factories as damages were getting worse.
Damages Brought by the Tsunami and Earthquake
Ghosn had no intention of closing the site, but some parts and assemblies were damaged so he made a decision. The production of vehicles was disrupted so only a limited number of vehicles were produced until it was further reduced to zero. During that time, there was a shortage of parts and supplies so production halted. Also, there was no supply of electricity as power plants were damaged and were not working. With these, a total number of 600 workers were suspended, some were evacuated while some stayed in the factories.
There was a drop of the stock since the day of the earthquake and it was even felt the day before the earthquake. Both the export rates and production rates of Nissan dropped from a 52.4 percent output rate to a low of 12.5 percent. However, damages encountered by Nissan were not as big as the damages encountered by other Japanese automakers such as Honda and Toyota.
The Recovery of Nissan’s Japanese Factories
Ghosn was eager to bring back the factories’ operations for it will be helpful in reviving the cities where the two Japanese factories were located. So, the automaker will be making an investment of $37 million or 3 billion yen. This will be for the reinforcement of the two plants and equipping them from earthquake damages in the future.
Ghosn added that he is still looking for the possible improvements that the plants need. This is because the areas where Nissan’s plants were built are near the areas with high probability of earthquake occurrences so it is important to take measures and precautions to minimize damages. According to studies conducted by the government, there will still be 8 magnitude earthquakes to hit Japan most especially near the plants’ areas within the next 30 years. Along with this, the Chubu Electric Power Co. was tasked to shut down the nuclear plant near Shizuoka, located west of Tokyo, Japan.
Moreover, Nissan’s plants in Japan are showing signs of recovery. On April 18, 2011, plants started partially operating for there was a shortage of parts caused by the earthquake. The automaker hoped to see changes on its operation and improvement in production as well as sales by the month of October, which did happen. The manufacturer did not want another drop in its profits and market share.
The automaker will ask the support of second and third tier suppliers. It wanted to develop alternate sourcing for components for this is what it lacks in most of its factories. Semi-conductor suppliers will be helping as well, to achieve its goals toward delimitation of earthquake damages.
Nissan is the second largest automaker in Japan so it only came naturally that it wanted to continue its good reputation and to continue producing good vehicles for its customers.