Japan's Big Three Stop Production, are US automakers ready to pick up slack?

Japan's big three automakers, Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. have shut down production. The moves comes after a massive earthquake and subsequent tsunami battered the island nation last Friday.

March 14 The Detroit News:  Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. reported damage to more than a dozen plants and facilities, mostly in and around the hardest-hit Tohoku region more than 200 miles north of Tokyo.

Toyota's big plants southwest of Tokyo were able to resume operations Friday, but the automaker is halting its domestic output for Monday as the country grapples with what Prime Minister Naoto Kan called the biggest crisis since World War II.

 "Toyota has decided to suspend production at all Toyota Motor Corp. plants, as well as all subsidiary vehicle-manufacturing plants on Monday," the automaker said.

The natural disasters affected more than a dozen auto plants and facilities owned by the three companies. Production is further impacted by the failure of nuclear power plants. The halt in production may not have any immediate impact in North America. Nissan, Honda, and Honda have major production centers in the United States.

However, as in any business, time is money. The longer the plants are closed, the greater the impact on Japan's auto industry. Even if the damage to the plants is assessed to be negligible questions remain.

• Will Japan be able to produce the energy the facilities need?
• Are shipping ports in good enough condition to move the vehicles out?
• If Japan is unable to produce energy, will it import more oil and thereby raising gas prices?

As repugnant as the thought may be, US automakers may benefit. If conditions in Japan worsen, automakers there will not be able to compete and the nation faces economic catastrophe. In the long term, the potential holes left in the car market will be filled by other manufacturers, particularly US automakers.

In the short term, Japan must figure out how to supply electricity. Right now, oil prices are dropping slightly because much of industrial Japan is shut down. But if Japan has to import more crude, world oil and gas prices could increase dramatically. $5 a gallon gas makes the Chevy Volt and other fuel efficient US vehicles even more palatable to consumers.