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Japanese Earthquake, Tsunami May Continue To Hinder Toyota

Last updated on Monday, April 25, 2011

(BLOOMINGTON, IN) - The Japanese earthquake and tsunami may knock the world’s number-one automaker off its perch.

Toyota may not return to full production until the end of the year, due to parts shortages caused by the disaster.

The company has interrupted production for a day at its Princeton, Indiana, plant three times this month, and plans to do so again on Monday.

Analysts say the slowdown could be enough for General Motors to reclaim the top spot it surrendered to Toyota three years ago.

I.U. Management Professor Mohan Tatikonda says Toyota got burned by what's now common in the auto industry: a leaner list of suppliers and a policy of "just-in-time" inventory.

He says those policies are effective at reducing overhead when everything is going right, but can leave a company with little recourse when things go wrong.

Tatikonda says the biggest winners could turn out to be not GM, but Chinese auto and parts manufacturers who suddenly have an opportunity to grab a chunk of the global market.

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