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Automakers hurting from supply disruption

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The 9.0-magnitude earthquake has forced a number of Japan’s major exporters to limit output from their factories—or in many cases shut them down completely. Now, companies in North America are beginning suffer from the disruption to the global supply chain. The Big Three automakers—showing signs of life after being pummeled by the financial crisis—are being forced in some cases to close plants or limit output as a result of the situation in Japan.

Paul Ingrassia, an auto industry expert and Pulitzer Prize-winning journalist, tells BNN the situation in Japan highlights the delicate nature of the global supply chain of major automakers.

“One of the cost-cutting measures over the last two decades…is just-in-time inventory practices…and that means you don’t really stock a lot of excess parts inventory,” he says.

Ingrassia also says the Big Three may benefit from the disruption to Japanese automakers.

“It looks like the big three are poised to benefit from this,” he says. They’re poised to benefit from the very strong Yen…a strong Yen makes exports from Japan a lot more expensive to consumers in Canada and the United States.”

Ingrassia says Toyota is the most vulnerable of the Japanese automakers, as a majority of the vehicles it sells in North America are imported from Japan.

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