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TOKYO: 28 Mar 11 -- Product development at Honda Motor Co. will be delayed by at least two weeks because of extensive earthquake damage at the company's global r&d center in Japan.
Honda today began transferring 1,000 employees, or about 10 percent of the workforce, from its tech center in Utsunomiya, north of Tokyo, to other sites while repairs are made.
The March 11 earthquake knocked down "many, many" walls and ceiling at the r&d center, especially in office areas, spokesman Keitaro Yamamoto said. The magnitude 9.0 temblor, the biggest ever recorded in Japan, also killed one Honda employee and injured 17 there.
Honda warned last week that it would take months for the r&d center to become fully operational, as the carmaker emerges as one of the hardest hit by the disaster. But it hopes to minimize the impact on product development by moving work to undamaged facilities.
"The delay in development is about two weeks, since the earthquake," Yamamoto said.
Earnings delay?
Honda has closed its Japanese assembly plants through at least April 3 and warned last week that it may have to curtail U.S. output as well after April 1 due to shortages of parts from Japan.
The automaker also has suspended U.S. orders for Japan-made vehicles such as the Fit small car, the Insight, CR-Z and Civic hybrids and the Acura TSX and RL sedans.
Honda is considering delaying its earnings announcement as the company copes with damage control and production suspension.
"We're considering it, but nothing has been decided," a spokesman said. Honda typically announces its fourth-quarter results in the last week of April.
The slowdown in product development will likely affect only models developed in Japan, Yamamoto said. But it is not expected to affect the Accord or Civic sedans, which are engineered in North America and mainstays of the U.S. lineup.
Most of the r&d functions being transferred out of the Utsunomiya center will temporarily go to factories where the associated parts or vehicles are manufactured, Yamamoto said.
No r&d functions are expected to be sent to the United States.
Honda was still trying to assess the cost of damage to the tech center, Yamamoto said.
Meanwhile, Honda -- like all of Japan's automakers -- is being hobbled by a shortage of parts from suppliers whose factories and power supplies were throttled by the earthquake.
Honda has about 110 suppliers in the quake zone, and about 10 percent of those are having difficulty resuming operations, Yamamoto said. Reasons vary for each supplier but include a lack of components from sub-suppliers, damage to facilities or lack of reliable power supplies.
Radiation concerns
A few Honda suppliers are also located in the no-go exclusion zone surrounding a leaking nuclear power plant that was damaged in the quake-induced tsunami. Those suppliers have the additional challenge of having a workforce that has been evacuated due to radiation concerns.
"We don't have much information on these companies, because they can't get back into the plants," Yamamoto said. He declined to identify the suppliers or what parts they make.
Honda expects to loose 46,000 units of production in Japan through April 3 because of the shutdowns. And it may also trim U.S. production because of the parts shortage.
Honda's U.S. factories get only a small portion of their parts from Japan. But supplies of engine and transmission components, as well as certain electronics, from Japan are very tight.
U.S. production slowdowns would vary from plant to plant, Yamamoto said. But they would likely first slow output to continue operating, rather than shut down altogether, he said.
Industrywide disruptions could become more widespread next month, triggering a 30 percent decline in global automobile production, forecasting firm IHS Automotive predicts.
Toyota Motor Corp. is among those warning parts shortages could force slowdowns at its North American factories. It has suspended most of its operations at 18 assembly plants in Japan.
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