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Old 03-18-2003, 06:22   #1 (permalink)
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Mazda, Japan's other carmakers prepare for war

Tuesday, March 18, 2003
By Kae Inoue and Lindsay Whipp / Bloomberg News

TOKYO -- Mazda Motor Corp. has joined Honda Motor Co. and other Japanese automakers in preparing contingency plans for war as the U.S. gave Iraq's President Saddam Hussein 48 hours to go into exile or face an attack.

Mazda, Japan's fifth-largest automaker, is preparing to ship its Mazda6 and 323 sedans to Europe through the Panama Canal or around Cape Horn if war disrupts traffic through the Suez Canal, said company spokesman Mark Schirmer. The rerouting would delay shipments by as much as two weeks and raise costs.

Honda, Japan's No. 2 automaker, and its domestic rivals are introducing measures such as stockpiling parts to keep overseas factories running if a war disrupts shipping. Honda, Toyota Motor Corp. and Nissan Motor Co. have all been raising output abroad to shield themselves from currency fluctuations and speed up deliveries overseas.

"Japanese automakers always have contingency plans to maintain supplies and they learned a lesson when the U.S. West Coast ports were on strike," said Koji Endo, an analyst at Credit Suisse First Boston Japan Inc.

The ports stoppage late last year halted output at U.S. plants because of a shortage of parts, and increased Honda and Toyota's costs by forcing them to transport supplies by air.

Mazda shares rose 1.9 percent to close at 212 yen in Tokyo, while Honda rose 1.5 percent to 4,040 yen. Nissan gained 1.3 percent to 801 yen, and Toyota rose 0.9 percent to 2,760 yen.

The share gains were spurred by a surge in U.S. stocks, on investors' optimism that a war in Iraq would be over quickly.

Stockpiling

Honda, which uses about 10 percent Asian-made parts in its overseas-built autos, said it's maintaining about two-weeks' supply of spares at plants in England and Turkey as part of a global stockpiling strategy, said spokesman Tatsuya Iida. Nissan, Japan's third-largest automaker, is also sticking to existing contingency plans, spokesman Gerry Spahn said without elaborating.

Toyota Managing Director Tokuichi Uranishi said the automaker has sufficient inventories at its European plants and dealers to last for at least three and a half months.

Bayerische Motoren Werke AG, the No. 2 luxury carmaker, said war surcharges from shippers were a "possibility." The company said exports to Asia from Europe could take an additional two weeks if the Suez Canal is closed and the carmaker is forced to divert shipments around the African continent.

BMW doesn't expect production to be affected. While it buys some parts from Asia, they are mostly electronic components that can be shipped by air, according to BMW spokesman Linus Schmekel.

DaimlerChrysler AG spokesman Thomas Froehlich and Volkswagen AG spokesman Guenther Scherelis both declined to comment.

Mazda, a third owned by Ford Motor Co., said shipping its cars to Europe around Cape Horn would add between 10 and 15 days to the journey. The Panama Canal route, which takes only six days longer than shipping through the Suez Canal, places more restrictions on vessel size, Schirmer said.

The automaker, which has seen sales in Europe jump 29 percent to 23,500 vehicles since the start of the year, is preparing for the extra cost involved in its plan, he said.

Mazda said it may also have to delay by a month a media event in Europe to showcase its RX-8 model, although it won't delay the car's release this summer, Schirmer said.

No Extra Measures

Honda isn't introducing any additional measures as a result of today's U.S. ultimatum, Iida said.

Nissan, Japan's No. 3 automaker, is "comfortable about its contingency plans," Spahn said. "We will continue to do business."

Mitsubishi Motors Corp., 37 percent owned by DaimlerChrysler AG, said its nine employees based in the United Arab Emirates and Saudi Arabia will remain in those countries for now. Japan's fourth-largest automaker is assessing the situation, said company spokesman Junzo Ishino.

Yamaha Motor Co., the world's second-biggest motorcycle maker, has banned business trips to the Middle East since December, said company spokesman Katsunori Segawa. One of its employees based in the United Arab Emirates is returning to Japan today, while one will remain in the country, with evacuation measures in place.

Operations of Suzuki Motor Corp., Japan's biggest minicar maker, are also unaffected, spokesman Takeaki Nukii said. If a war breaks out the company will ban all overseas business trips he said.

Parts, Gasoline

Toyota President Fujio Cho said last month that Japan's largest automaker has already made plans to maintain parts supplies in case of war. "The risk out there is the increase in oil price and how that would affect sales," he said.

Japanese automakers are concerned that sales abroad may be damped by a surge in fuel prices as a result of the looming war. They are especially concerned consumer sentiment may be hurt in the U.S., their biggest, most profitable market.

The average price for U.S. retail gasoline rose to a record $1.728 a gallon yesterday because of lower crude oil stocks and slower output from refineries, the U.S. Energy Department said in a weekly report. U.S. crude oil supplies are near a 28-year low, and the price of crude last week reached a 12-year high of $37.83 a barrel, based on New York Mercantile Exchange futures.

Companies and analysts expect total U.S. auto demand to fall to about 16 million units this year from 16.8 million in 2002.
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