Wilbur Ross:Japan Car Market Was Weak Even Before the Tragedy
CNBC Senior Talent Producer
Since the deadly earthquake and tsunami in Japan, the auto industry is facing supply chain shortages which are impacting their manufacturing decisions. But paint isn't the only challenge facing automakers. Some auto parts are manufactured in Japan.
Wall Street waits to see what kind of impact this will have on dealers when it comes to servicing their customer's cars.
I decided to ask legendary turnaround specialist Wilbur Ross, who owns the auto parts giant International Automotive Components Group, about how the disaster is impacting the auto parts industry.
LL: You have said in the past you are looking to build on to your IAC Group with new plant start ups in China and India markets.
With the auto parts supply industry being impacted by the Japan disaster, how much do you expect to flow into China and India in order to make up for the demand?
WR: We have a lot going on. We have been building up in China and India independently of Japan's problem. For example we recently acquired a small competitor in India who sells to Suzuki, which had not previously been a customer of ours there but is actually the leading auto brand in India and we are opening another factory in china, mainly to support Japanese OEs there.
LL: How much damage did your facilities in Japan suffer? Are your employees ok?
WR: We are fortunate that our Japanese facilities and staff are unharmed, though a few parents of our employees have had problems.
LL: In terms of product, how much does Japan play in the overall production of what IAC supplies?
WR: Our production in Japan itself is only about 10 percent of total sales, though our global exposure is much larger. Undoubtedly the OEs will raise production abroad to make up for shortfalls in Japan. The industry itself will be raising production soon, but the intra Japan car market was weak even before the tragedy.
LL: The auto supplier industry went through a dramatic transformation in the last several years with the weaker players going under and there is less overcapacity now. How will this disaster impact the industry?
WR: I think that the main long term impact on the global automotive supply chain will be that vulnerability to natural disasters will be taken more seriously in sourcing decisions and this will probably make it somewhat easier for Western suppliers to gain market share from the traditional keiretsu relationship suppliers.
LL: Finally, you are chairman of the Japan Society which is raising money for the victims of the Tsunami and Earthquake. Where can people go if they would like to donate and how much as been raised so far?
WR: Japan Society so far has raised $2,375,000 from 8,402 donors. The web site for giving is japansociety.org. Given how many other groups are raising funds, I am thrilled with this response. It shows the generosity and affection individual Americans have for the Japanese victims
Questions? Comments? Email us atNetNet@cnbc.com
Follow on Twitter @ twitter.com/loriannlarocco
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC
A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."