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Auto Parts Shortages Slow Production But Impact Reduced in U.S.

March 29, 2011

TORONTO – A new report from Scotiabank, a Canadian financial institution that operates in the U.S. and Canada, shows auto parts assembly plant shutdowns in Japan will affect the global auto supply chain. That said, the report stated U.S. auto manufacturing is somewhat insulated from the effects of the parts shortage because roughly 80 percent of all auto parts used in assembling new vehicles in the U.S. and Canada are produced in North America, in the U.S., Canada, or Mexico.

Japanese auto parts account for 6 percent of all auto parts purchased in the U.S. and Canada. The report also found the share of overall auto parts imported into the U.S. has fallen to 14 percent, which is half of the level of auto parts imported in the 1990s. Although the parts supply issues are less of a problem in the U.S., Scotiabank noted that assembly plants outside of Japan have been impacted. Specifically, Toyota has stopped overtime operations at 14 plants in North America. In addition other automakers, such as General Motors (though GM resumed production this week) and PSA Peugeot-Citroen, already announced work stoppages due to parts shortages.

When it comes to parts produced in Japan, the report found automotive electronics, such as semiconductors and infotainment systems, in addition to the chemical resins used in automotive paints, will be affected.  Japan supplies 21 percent of global semiconductors, and produces integrated circuits and sensors for automobiles, according to Scotiabank. The report added that in many cases automakers can’t find alternative suppliers due to the proprietary nature of many niche automotive parts produced in Japan.

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