Mazda said Friday it would ask its parts suppliers to increase stockpiles in Japan and produce components outside China after COVID-19 lockdowns in Shanghai destabilized supply and hampered production.
The request from the Hiroshima-based automaker underscores the vulnerability of sprawling supply chains, which have been tested by the pandemic and geopolitical tensions, casting uncertainty over businesses.
The automaker reported on Tuesday an operating loss of ¥19.5 billion ($144.4 million) for the first quarter of its financial year, partly due to disruptions resulting from the stringent COVID-19 countermeasures in China.
Mazda said it brought chips and crucial auto parts to China to be assembled, but was unable to receive those parts from Shanghai during the city's lockdown.
Even if Mazda's direct suppliers were Japanese and European companies, they still had parts coming through China, said Takeshi Mukai, the automaker's senior managing executive officer.
"In our case, we were the first to be affected by the lockdown, as we had been promoting the procurement of parts via China for a while," Mukai said. "Given the current policy, the key point is to keep (parts) in our hands," the executive said, referring to China's strict "COVID zero" policy.
Mazda will seek to include higher domestic inventories and diversification of production outside China when forming contracts with suppliers for designing new models in the long term, he said.
The automaker will also seek to simplify its procurement structure as a way to reduce the frequency of distribution between bases, he said.
"As we continue to do business globally, we must manage the current changes based on the recognition that we are no longer in the era of globalization as we were in the past," said Mazda senior managing executive officer Masahiro Moro.