Japan's Big Two Slow Domestic Production - Make Cuts

TOKYO December 4, 2008; Yuri Kageyama writing for the AP reported that Toyota and Honda are starting to feel the pinch of the global slowdown at home.

On Thursday, Japan's biggest automaker said it was suspending production at a third plant later this month as it tries to cope with falling demand in the U.S. and around the world.

Toyota Motor Hokkaido Inc., a major subsidiary that makes engine transmissions, will stop all its assembly lines Dec. 25, company spokesman Harutoshi Fukasawa said. It will be the first work stoppage at the plant in 15 years caused by falling production.

The plant, located on Japan's northern island, makes automatic transmissions and other parts, mostly for the Corolla compact exported to the U.S., where Toyota's sales plunged more than 30 percent in November.

The news came a day after Toyota said two other plants will temporarily suspend some production.

"Japanese auto demand was already bad, but now U.S. demand is falling and the situation is extremely difficult," Fukasawa said, adding some lines will also be stopped on Saturdays in December.

Additional plant closures may be needed in months ahead if U.S. troubles continue, he said.

Meanwhile, Japan's No. 2 automaker Honda Motor Co. said Thursday it is cutting jobs in Japan because of plunging auto demand.

Honda is reducing 760 temporary workers, or nearly 18 percent of its domestic temporary work force of 4,300, at four plants, including one motorcycle plant, this month and next month, said company spokesman Hideto Maehara.

It has also offered an early retirement package for workers at its plant in Britain, although the number of workers to be cut has not been disclosed.

Honda, whose U.S. sales last month tumbled 32 percent, declined to say how the job reductions will affect vehicle production plans.

The U.S. recession, set off by the credit crisis earlier this year, is battering sales at Japanese automakers, which until recently had been weathering higher gasoline prices and the global slowdown better than their money-losing American rivals.

On Wednesday, Toyota Motor Corp. said it will suspend production of Lexus luxury models at its Tahara plant, in central Japan, and output of all vehicles at its Miyata plant, in southwestern Japan, on Dec. 24 and 25. Christmas is not a holiday in Japan.

The Miyata plant, which makes Lexus cars, Kluger sports utility vehicles and Harrier hybrids, is run by subsidiary Toyota Motor Kyushu Inc., spokesman Toshiaki Hori said.

Toyota's U.S. sales tumbled 34 percent in November, including a 35 percent slump in its Lexus luxury line. Many of the Lexus models produced at the two plants are exported to the United States.

Toyota officials said they expect short-term sales to be down, but that the introduction of new models in the U.S. could boost sales in early 2009.

The company has slashed its net profit forecast for the fiscal year through March to 550 billion yen ($5.9 billion), or about half of its earlier projection of 1.25 trillion yen ($13.4 billion). It also has lowered its projected global production to 8.24 million vehicles for the year ending March 2009, down 5.7 percent from an earlier projection of 8.74 million.

Hori said winter bonuses for Toyota's 8,700 managers would be cut by 10 percent, but declined to disclose the total amount of money saved.

AP Writer Mari Yamaguchi contributed to this report