Honda cuts US production in half in wake of Thailand floods

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Nighttime close-up of a lit-up Honda dealership logo sign.

Honda and other automakers' production lines are reeling in the wake of the Thailand floods. (Photo Credit: CC BY-SA/Ian Muttoo/Flickr)

Three months of catastrophic floods across Thailand have paralyzed Honda’s parts and assembly chains, reports the Detroit Free Press. Shortages have forced the Japanese automaker to cut North American factory production by half for the second time in 2011. The previous occasion was the March 11 earthquake and tsunami in Japan.

Honda cutbacks will run until at least Nov. 10

While Honda searches for backup suppliers to deliver the necessary microprocessors for automotive assembly, the company will maintain half production in the U.S. and Canada until at least Nov. 10, sources indicate. In addition, Honda will cease all U.S. and Canadian production on Nov. 11, and all overtime work will be put on hold for the rest of the month.

Agence France-Presse notes that Toyota and other automakers are experiencing similar problems because of flooding in Thailand. Nissan’s Thailand plants will be shut down until Friday, and Ford has also shut down production in the country. General Motors has yet to report production problems, but the automaker has said it is “monitoring the situation.”

On the heels of tumbling profits

The Thailand floods have come at a bad time for Honda, as the previous quarter for the automaker was clouded by a 56 percent profit drop. Net profit for the fiscal second quarter of 2011 (July through September) fell to $788 million. Worldwide sales were down 16.3 percent from the previous year’s quarterly performance at $24.6 billion, while North American sales were down a whopping 22.3 percent.

A strong yen and still-recovering production following the March 11 tsunami disaster haven’t helped, either.

Despite the setbacks, Honda has assured the automotive media that no layoffs are planned in the U.S. or Canadian auto plants. The automaker employs 21,000 U.S. factory workers and operates 10 U.S. and Canadian production factories in Ohio, Alabama, Georgia, Indiana and Alliston, Ontario.

Thailand floods began in late July

Fed by extremely heavy monsoon rains and a string of tropical storms, the Thailand floods have devastated the nation. Currently, 381 people are confirmed dead across more than a third of Thailand’s provinces. Water has reportedly washed out millions of crop acres and closed thousands of factories.

Thailand floods worst in a half century


Agence France-Presse

Detroit Free Press

Financial Times

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