Dahiatsu closes production facilities after safety scandal
Daihatsu Motor Co. shut down domestic vehicle assembly plants after admitting decades of fraudulent falsification of safety tests, alarming local communities, suppliers and workers employed by the company, striking a blow to the proverbial Japanese economic strength.
On December 25, vehicle production was halted at Daihatsu plants in Ryuo, Shiga Prefecture, and Oyamazaki, Kyoto Prefecture, and at a subsidiary plant in Nakatsu, Oita Prefecture.
Dahiatsu factory in Ikeda
The company's vehicle assembly operations came to an abrupt halt after its plant in Ikeda, Osaka Prefecture, suspended production on December 26.
The four plants, which together assembled about 930,000 vehicles in fiscal 2022, will remain idled until at least the end of January. It has not been decided when activities will resume.
Factory workers will be assigned to office work, cleaning and other duties during the day. Night work will be suspended. Obviously it is a solution that can only last for a few weeks, after which either production resumes or it closes.
In Ryuo, a city of just over 10,000 people, the Daihatsu plant employs about 4,000 full-time workers.
The crisis extends to the entire industry: a company that supplies more than 90% of its products to Daihatsu has put more than half of its approximately 1,000 employees on leave after being informed on December 20 that the Daihatsu plant would be was closed due to the scandal.
“It's so difficult that we can't see a way forward,” a company official said. “We trust (Daihatsu) will take steps to address the situation.”
In Ryuo, the city is in almost total symbiosis with the automotive company: for example, in the 2021 fiscal year, the city launched a program that provided for the free loan of a Daihatsu vehicle for three years to a family that had given birth to two or more children. Now the city is holding its breath.
The Daihatsu Motor Kyushu Co. plant in Nakatsu, which employs about 4,200 workers, accounts for more than half of the Daihatsu group's domestic vehicle production.
The city has a population of approximately 80,000 inhabitants. It receives around 20% of its municipal corporation tax revenue from car companies, including subsidiary Daihatsu.
On December 25, the Oita prefectural government launched a consultancy service for Daihatsu's business partners and other interested parties.
According to credit research firm Teikoku Databank Ltd., 89 companies in the prefecture directly or indirectly supply parts and materials to Daihatsu Motor Kyushu, and revenues from related businesses are estimated to be 480 billion yen ($3.37 billion).
At a spare parts supplier whose transactions with the Daihatsu subsidiary account for 10-15% of its overall sales, seven workers produced parts for the company.
Daihatsu said on Dec. 25 that the company had reached an agreement with the union to compensate employees' salaries due to the shutdown. Details were not disclosed.
The company will also buy some of the parts that its 423 major subcontractors were supposed to deliver by the end of January as a form of compensation.
However, these are stopgaps that may last for a short time: Dahiatsu and its parent company Toyota will have to quickly choose whether and how to reform the brand and design a strategy to regain public trust, shaken by the scandal over the falsification of car safety data, or choose to close the brand directly and or close or otherwise use the factories.
Japan does not have an unemployment problem, in fact it imports foreign workers, but the shutdown could cause a short-term employment shock.
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The article Dahiatsu closes production plants after safety scandal comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/dahiatsu-chiude-gli-impianti-di-produzione-dopo-lo-scandalo-sicurezza/ on Tue, 26 Dec 2023 08:00:17 +0000.