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GM Halts 'Nonessential' Spending Due to Japan Crisis

Saturday, 19 Mar 2011 | 5:15 PM ET

General Motorsis cutting non-essential expenses and travel while it assesses the situation in Japan, a sign the auto industry is unsure how much the earthquake and tsunami may cripple the production of new cars and trucks.

Auto worker works on assembly line at GM Lansing Grand River plant.
AP
Auto worker works on assembly line at GM Lansing Grand River plant.

GM CEO Dan Akerson sent employees a memo late this week telling them the move is a precaution while the company tries to determine how much it will cut production due to a shortage of parts from Japan. Akerson wants to make sure GM has an adequate supply of parts needed for final assembly.

Last week, GM said it would suspend operations at its plant in Shreveport, Louisiana and at two plants in Europe. The production halts are the result a suppliers in Japan being unable to provide unspecified components.

Ever since a 9.0 earthquake rocked Japan and caused a tsunami on March 10th, numerous auto suppliers in Japan have halted operations. Many of the parts makers have operations north of Tokyo, which is the area hardest hit by devastation in Japan. These companies supply everything from semi-conductors to advanced electronics for automakers around the world.

CNBC - Disaster in Japan - Japan Earthquake and Tsunami
CNBC - Disaster in Japan - Japan Earthquake and Tsunami

Late last weekFord said it was still trying to determine what impact, if any, the crippled Japanese auto industry will have on its operations. The biggest Japanese automakers, Toyota, Honda and Nissan have all halted final assembly of vehicles in Japan, even though their final assembly plants survived the earthquake with little damage.

The suspension of auto production in Japan and the uncertainty of auto parts production in that country is causing prices for some vehicles to start edging higher. Truecar.com reports prices for the Toyota Prius have moved up in the last week, even thought Toyota says its supply of Prius hybrids is adequate.

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