WSJ: Nissan Suspends Some Production

[question everything]

Nissan Suspends Some Production

Steel Shortage, Popularity Of New Models Are Cited; Good News for Japan

By JATHON SAPSFORD and PATRICK BARTA
Staff Reporters of THE WALL STREET JOURNAL
November 26, 2004; Page A3

Nissan Motor Co. is temporarily shutting down the bulk of its production capacity in Japan because it can't get enough steel to keep pace with demand for its models.

(snip)

The scarcity of steel will cause Nissan to suspend production on three lines at key factories for five days in late November and early December. The move, the result of what Nissan says is strong demand for the six new models introduced to Japan earlier this fall, will force Nissan to delay production of 25,000 vehicles. Nissan plans to suspend the operations from Nov. 29 to Nov. 30 and from Dec. 6 to Dec. 8, a spokesman said. The company says it will make up for the lost production early next year.

(snip)

Nissan described the steel shortage as temporary. But the shutdown comes as other Japanese auto makers scramble to make sure they can come up with the steel to keep production flowing. Toyota Motor Corp. and Honda Motor Co. said the tight steel market hasn't caused them problems, though they are watching the issue. Toyota said it is looking for more efficient uses of the steel it procures and is cutting down on the variety of steel it uses and placing orders early, to give its suppliers more time to meet the orders.

(snip)

Japan's steel industry, hammered by deflation for 15 years, has restructured. Since 1989, Nippon Steel Corp., a big Nissan supplier, has reduced staff by 60% to 21,400. Other steelmakers, meanwhile, have consolidated, concentrating power into a handful of large and profitable companies that now have more clout with their customers. Car makers may find it harder to play one steelmaker off another, especially as demand for steel remains high.

---- Paul Glader contributed to this article.

Write to Jathon Sapsford at [e-mail] and Patrick Barta at [e-mail]

URL for this article:
http://online.wsj.com/article/0,,SB110136798295183523,00.html

[AP]

1. Is this because of demand in China?

[question everything]

2. Apparently

More from the story:

The stoppage is likely to raise questions about whether Nissan's supply chain is so tight that it leaves the company vulnerable to supply disruptions.

(snip)

Different parts of the world have experienced tight steel markets and higher prices throughout the year, reflecting in large part the huge demand in China for steel and raw materials used to make steel. In the U.S., steel producers have tried to add surcharges to contracts with auto makers, with less success. At this point, U.S. car makers haven't seen the same steel shortages, in part because auto production is slowing.

[jamesinca]

4. Also the U.S. is sitting on the steel surplus

When the U.S. imposed tariffs on steel some time back and the WTO got involved we were sitting on a vast majority of the worlds surplus. The U.S. has lost every arbitration and case on this since. Europe is now moving forward to impose embargo's and their own tariffs as penalty because the U.S. will not change its attitude. Chenney even stated that the tariffs were payback of political favors. I bet that is playing a lot into this.

[Ironpost]

3. I suspect you are right.

A couple months back I called the local supplier for metal studs, he told me that the price had gone up to almost $3.00 a piece when a year ago they were $1.44. He asked if I had an account with them and I answered no. He said sorry we won't have any to sell you. I asked why and he said they were all being sent to China, a big building boom in China was where they were being sent. He said their largest customers (money wise) were the only ones they were serving. I said thank you and hung up. * has us in a real fix.

[AP]

5. Thanks GWB for ruinning our economy just when we could have used the money

to compete with China. Oh, and thanks America for thinking that the best way to win the game of politics was to destroy democratic-leaning unions and to ship all our factories overseas.

If America had been fighting for labor rights around the world for the last 50 years instead, we could have kept our factories and made money off of selling things to other growing economies.