June 29, 2011

Nissan Recovery Stories

At 2:46 in the afternoon on March 11, an unprecedented disaster struck Japan, claiming over 24,000 lives and threatening the safety and livelihoods of millions in the country.

For Nissan, some five staff and 17 family members perished in the devastating 9.0 magnitude earthquake and tsunami, with more than 50 dealerships and parts suppliers damaged, as production across Japan shut down completely.

At the Yokohama headquarters, which felt the quake although 250 kms away, an Earthquake Crisis Committee of executives met within minutes, but the magnitude of destruction and potential impact on Japan and Nissan had no blueprint.

The response would test the resilience and imagination of company staff, with heroes emerging to help lead Nissan, its many customers and stakeholders to safer ground.

For Miyagi branch manager Hiroyuki Sato, who lost two staff and was himself listed among missing after the tsunami struck, a slow evacuation from the disaster zone gave insight into how great its impact.

“I had seen the tsunami with my own eyes from the coastal town of Onagawa, and roads were now covered with debris and impassable. On the fourth or fifth day... I could finally contact the office by cell phone, and when my boss answered, he exclaimed: "You're alive." I apologized for worrying others, and then I contacted the dealer president and other executives to tell them that I had survived. I learned about the status of our customers, the dealership and the showroom.”

Amid the growing tragedy, commitment to those losing cars and family mobility remained top priority, while the company offered Nissan LEAFs and other vehicles to relief efforts.

Masaki Kobayashi, president of Nissan Prince Miyagi, said resources were deployed to deal with the crisis and help those most in need.

“Miyagi Prefecture is very big and the area near the ocean felt the brunt of the tsunami, while other areas basically just endured the earthquake. We have 26 car outlets, and there was tremendous damage at five new and two used car outlets. We tried to get vehicles from centers like this to the coastal and damaged areas, while also looking to come up with a recovery plan, but at the same time, gasoline supplies became thin. Our customers and our own staff couldn't drive around, and this went on for two weeks. It became very important to direct all company resources in the same direction.”

Slowly, vehicles made it to the disaster zone, while at the Iwaki factory in Fukushima, General Manager Nobuhiro Ozawa and team faced their own extensive structural damage.

Ozawa's plant produces over 370,000 Nissan and Infiniti engines yearly, and Iwaki's "Gambappe" recovery -- even after a second quake struck in early April -- became a symbol of Japan's resilience amid the tragedy.

“Everyone was safe -- we were lucky. Our factory infrastructure, though, except for electricity, was completely down with damage very serious. Skylights, cables and apparatus hung from the rafters, and we really couldn't enter the factory immediately. We thought it would take a very long time to recover.“

That moment came mid-May, marked by a return Iwaki visit by CEO Carlos Ghosn.

However, Nissan's parts and car pipeline had faced an equal test after the earthquake.

A huge vessel with 600 Nissan LEAFs left Yokohama just before disaster struck, but Japanese ports and highways were then closed, with cars and auto parts for export or transfer destined to sit without resourceful action.

At the logistics centers of Honmoku, Kyushu, Aichi and Fuji, which see 400 container shipments daily, the lockdown of the supply pipeline became General Manager Kiyoshi Onoe's problem to solve.

After immediately ensuring his team and facilities were safe, a comeback strategy was mapped out.

“After the earthquake, we really focused on reviving operations, knowing we couldn't do it by ourself. It required huge support from many, but two key factors emerged: Colleagues from 10 overseas factories came to Honmoku -- not to obtain their own car parts, but instead to sort out worldwide factory allocation and to share existing supply, thus prioritizing market needs. These factories had stopped overtime and weekend work, so that helped in our resume shipments without confusion. The other key was staff at Honmoku, Kyushu, Aichi and Fuji never gave up in trying to ship parts and reopen the pipeline. That was the biggest factor in recovery.”

Today, Honmoku and other Nissan wharfs, factories and dealerships are now back on-line through the overwhelming team response to the crisis. Still, the impact of that day in March will be felt for years, although Nissan can look back on its staff's heroic response to the greatest natural disaster in Japanese history and know its people stood tall.