It seems that Toyota Motor’s announcement on 10th July 2008, which said that production lines at three plants for truck engines would be shut down from early August until November, was just the start of a steady downturn that would affect many other sectors.
In 2001, when Hino Motors came under the Toyota Motor wing, the Toyota Group enjoyed a vigorous take off. In 2002, the number of units produced by the group stood at 6.31 million, and by 2007 that figure had rocketed to 9.49 million - an annual increase in production of 600,000 units.
The group had predicted production exceeding 10 million for 2007, and had therefore made the necessary arrangements for an increase in production.
When hit with a slump in demand as a result of the global economic crisis, the group was forced to take drastic measures to secure its survival, having to revise the total number of vehicles it produced, and therefore taking the decision to decrease production in Japan by 15%.
On implementing this, the group froze capital investment, halted machinery investment, and increased production within the company itself, rather than giving the work to outside companies.
The changes in policy resulted in negotiations for price increases, such as for welding wire, which had been ongoing since the summer, to be frozen. The effects of this are gradually reaching the other industrial sectors.
Subcontractors, which produce parts for Toyota, are beginning to feel the impact; and therefore cancellation of orders, such as for welding equipment, has led to problems for the industrial gas companies.
The industrial gas market has enjoyed an annual growth of nearly 20% over the past seven years, a substantial part of which can be attributed to the automotive industry.
In November 2008 alone however, demand for argon and carbon dioxide for use in welding decreased by more than 30%. Such a dramatic drop has caused the gas industry to be shaken, and it is unknown just how much of an impact it will create. Cylinder demand has also dropped, prompting the industrial gas companies to construct liquid and filling gas plants as a measure to deal with the shrinking market.
Suppliers of bulk gases are also suffering as a result of a decline in demand for semiconductors; each Lexus car requires an IC chip equivalent to an 8 inch wafer. The drop in the amount of ICs and electronic components has been drastic as a result of the decrease in levels of production of vehicles.
Hopes are now being placed on the aircraft industry as a measure which should alleviate the situation in Japan, the Gas Review notes.