Kink in supply chain between Detroit and Japan

A man inspects new Toyota cars on display at Melody Toyota February 1, 2005 in San Bruno, California. Toyota and Nissan reported healthy gains in their U.S. sales as the nation?s two biggest automakers, General Motors Corp. and Ford Motor Co., reported soft sales in January.

JEREMY HOBSON: Toyota, Honda, and Nissan are just some of the companies that have had to suspend production because of the disaster in Japan. And the industry research firm IHS Automotive now says auto companies here in the U.S. will really start feeling parts shortages next month.

Let's continue our coverage of how Japan's disaster is affecting the economy with Michelle Krebs, senior analyst at Edmunds.com. She's with us from Detroit. Good morning.

MICHELLE KREBS: Good morning.

HOBSON: Give us a sense of what's actually going on where you are.

KREBS: At the moment there's no big changes. We aren't seeing massive shutdowns of plants, but we are seeing automakers scramble to find where they might be vulnerable. What part might be made in Japan that could slow or shut down that production here. For instance, Ford telling its dealers not to order certain color because the pigment comes from Japan. But I think in the next month we may start seeing some plant shut downs because of part shortages.

HOBSON: And how difficult, Michelle, is it for companies to simply adjust the supply chain a bit and get their parts from other places?

KREBS: Well, it's very difficult because there are a couple things at play. First of all, the supply chain these days is global, where are you know, 20, 30 years ago it was not. The other thing that has changed is most manufacturers operate on a just-in-time delivery system. So they don't have warehouses full of parts. They only build that number of parts for the vehicles and have them delivered to the factory. So that means a glitch could shut down the assembly line.

HOBSON: Michelle Krebs, senior analysts at Edmunds.com. Thanks so much.

KREBS: Thank you.

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