Honda to cut US, Canada production by half

Parts shortages from three months of catastrophic flooding in Thailand have forced Honda to cut United States and Canadian factory production by 50 per cent for the second time this year, the automaker said Monday.

The cuts, which come just as Honda Motor Company was recovering from the March 11 earthquake and tsunami in Japan, will run from Wednesday at least through November 10 as Honda tries to find alternate sources for microprocessors that are made in Thailand.

The flooding, which began in July and has forced many auto parts plants to close, also affected Toyota Motor Company, which cut overtime for production in North America through the end of this week.

Honda's announcement comes the same day the Japanese automaker announced that its quarterly profit tumbled 56 per cent, battered by the strong yen and production disruptions from the March tsunami disaster.

The automaker, which makes the Accord and Civic sedans, said Monday that net profit for the July-September fiscal second quarter fell to 60.4 billion yen (US$788 million).

Quarterly sales sank 16.3 per cent from a year earlier to 1.885 trillion yen (US$24.6 billion), with sales in North America falling the most - 22.3 per cent.

Flooding in Thailand, where Honda has parts suppliers and assembly lines, made it too difficult to forecast earnings for the full fiscal year through March 2012. A projection will be announced when it becomes available, the company said.

Honda also said it will stop all production in the US and Canada for one day on November 11, and all Saturday overtime work will be cancelled through November.

Spokesman Ed Miller said it's too early to tell if there will be a repeat of model shortages that occurred during the summer and early fall due to parts shortages from the earthquake and tsunami.

The company said in a statement that the December sale date for the 2012 version of the popular CR-V crossover vehicle could be delayed by several weeks. Honda says it will announce the sale date in the near future.

Last year, 87 per cent of the Honda and Acura luxury vehicles sold in the US were made in North America, the company said. Most of the parts are produced here, but a few critical electronic parts such as engine control modules come from Thailand and other countries, Honda said.

Miller said the company is trying to find other sources for the parts made in Thailand, but production of newer models such as the Civic compact and CR-V will be most affected by the parts shortages.

Honda said it will not lay off any workers at its US and Canadian auto plants. The company has 21,000 US factory workers and 10 US and Canadian auto factories in Ohio, Alabama, Georgia, Indiana and Alliston, Ontario.

Other major automakers also were affected by the flooding in Thailand, but only Honda and Toyota reported factory disruptions in North America.