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ICIL 2016 International Conference on Industrial Logistics September 28 – October 1, 2016, Zakopane, Poland IMPLICATIONS OF SEISMIC HAZARD IN JAPAN ON TOYOTA SUPPLY CHAIN DISRUPTION RISKS Joanna R. MARSZEWSKA Jagiellonian University, Kraków, Poland Abstract This paper discusses disruption risks of Toyota supply chain implied by seismic hazard in the area, where major suppliers and assembly plants are located. Based on seismic hazard map of Japan and the two recent: 2011 Tōhoku and 2016 Kyūshū earthquakes, the supply chain disruption causes and effects are analyzed. The findings indicate that due to limited area for potential plant locations and transportation links in Japan, the supply chain decision-makers can hardly account for seismic risks. Keywords: seismic hazard; disruption risks; supply chain design; plant location, Toyota supply chain 1. INTRODUCTION Supply chains disruption risk management has become a vital part of supply chain management strategy. The low-probability and high-impact flow disruptions and the resulting losses may threaten financial state of firms. Japan is considered to be the most dangerous spot in the whole world that is exposed to the various natural disasters. For example, the disruptive events that occurred in 2011 in the automative and electronics supply chains resulted in huge losses of major automakers and electronics manufacturers, e.g., [1–6]. Japan (for a tectonic map of Japan, see Figure 1) lies along the western part of the Pacific Ring of Fire, which is tectonically still unimaginable active place on the Earth. Japan, in the central part of the main island Honshū, is divided by two tectonic plates: North American (NAP) and Euroasian (EuP) and laying along connected with them, in two Triple Junctions, two others: Pacific (PP) and Philipino (PhP) from the East. Along the west boudary of the Pacific and Philipino Plates run the deepest trenches. This is place of plates collisions and every their shift cause thousands of earthquakes every year. But most of them are imperceptible. However at those subduction zones can occur unpredictable megathrust earthquake. Landform along the Japanese islands also is very complicated because of the great number of faults [7]. These faults occur in continuity that form tectonic zones like Fossa-Magna and Niigata-Kobe on Honshū. In the middle of the main island runs a major fault in Japan Itoigawa-Shizuoka (Itoigawa-Shizuoka Tectonic Line = ISTL) and Median Tectonic Line (MTL) which is the longest fault system in Japan. The beginning of MTL is in the area of Fossa- Magna, and runs from the central part of Japan passing Kii Peninsula and Shikoku Island to the south of the central part of Kyūshū. This zone is divided into six regions of expected seismic activity of magnitude 7 to 8 on the Richter scale. The recent (April 2016) earthquake with epicenter on Kyūshū is an egample of the very serious danger which can have its effects in continously chain earthquake along MTL and reach the area even near Tōkyō. As an example, a magnitude 6.2 foreshock struck Kumamoto on April 14 and then a magnitude 7 mainshock hited on April 16, 2016. In the next days more than 100 aftershoks occurred on Kyūshū island causing losses among the people (about 50 dead), geological deformations in landscape, collapse Page 178 Conference Proceedings ICIL 2016 ISBN 978-83-62079-06-3 of buildings and disruption in communication. As a result of activity of crust movements several volcanic belts [8] extend along Japan Islands and trenches. The number of active volcano is about 100 [9] Among them the most dangerous volcanos are situated on Kyūshū, in the middle part of Honshū including Mt. Fuji and in the north part of Japan. Any of probable eruption is connected with great amount of volcanic ashes fallout and its range which is mostly depending on the wind direction. Volcanic bombs are also regarded as a danger in area of eruption. In such conditions Japan is exposed to many hazards from nature. But not only the location causes those dangers. Climate and various atmospheric phenomenons also have a very big impact on safety in Japan. Natural hazards that occur in Japan can be: earthquake, tsunami, volcano eruptions, taifū (typhoon), floods, landslides, winter monsoon or sometimes connected with them fires. It is very difficult to choose/decide the safety place for industrial investment in Japan also because of landform of this country, which has about 80% of mountains. Figure 1 – Tectonic map of Japan [7] The purpose of this paper is to analyze the implications of seismic hazard on plant location and logistics decision-making in the automotive industry in Japan. The paper is organized as follows. The description of selected hazardous regions in Japan is presented in Section 2. The major earthquakes in Tōhoku (2011) and Kumamoto (2016) regions are analyzed in Section 3 and final conclusions are made in Section 4. 2. DESCRIPTION OF SELECTED HAZARDOUS REGIONS 2.1. Aichi Prefecture Near Aichi Prefecture about 100 km from the shore lies Nankai Trough (NT), which marks a subduction zone of Philipine Plate beneath Amurian Plate, part of Eurasian Plate. There is very dangerous and extensive fault situated under NT, which is divided into three zones of possible megathrust earthquakes. The zones are Tōkai, Tōnankai and Nankai. The two last areas are additionally divided into two more stretches each of them. In total in these three zones they create five segments, which are seismically very active. Depending on epicenter of shake in the fault in an affected area of coastal region “Pacific Belt” (zone of megalopolis running mainly along the Pacific coast) a damaging tsunami (megatsunami) may occur. The risk of Nankai earthquake Page 179 ICIL 2016 International Conference on Industrial Logistics September 28 – October 1, 2016, Zakopane, Poland in the near future is very high. According to the historical records earthquakes in this region occur with a return period of about 150 years and all of them have resulted in devastating tsunami. In case of quake with epicenter in Nankai fault it is highly probable that tsunami can enter seaside area of Aichi Prefecture. For Toyota it would be a serious impact on supply chain (for location of Toyota plants, see Figure 2). The last one Tōnankai Earthquake, a magnitude 8.1 occurred in 1944. Toyota Motor Corporation has its plants mostly in Aichi Prefecture. The main headquarter Honsha is located in Toyota city which is the largest city in this region. It is situated inland about 35 km from Nagoya, toward the mountains. Near Honsha there are six plants like Motomachi, Kamigo, Takaoka, Tsutsumi, Teiho and Hirose. Figure 2 – Location of Toyota plants [10] At other location between Toyota city and Nagoya there is Miyoshi city with three plants Miyoshi, Myochi and Shimoyama. And there is Kinu’ura Plant in Hekinan city in some distance from Chita Bay and Tahara Plant in Tahara city situated on Atsumi Peninsula. Toyota Auto Body Cooperation has its two plants (Kotobuki New Development Center and Yoshiwara) in Toyota city, two other (Kariya and Fujimatsu ) in Kariya city. And in the neighboring prefecture of Mie has Inabe Plant in Inabe city and at the greater distance in Gifu Prefecture, Gifu Auto Body Honsha. Most of the factories are located far from the sea and are not exposed to possible tsunami caused by quake. But there are two exceptions of Hekinan and Tahara, both situated not so far from the sea. It should be mentioned that after 2011 Tōhoku Earthquake, tsunami was observed in the coastal region along Japan Archipelago, including neighborhood of Nagoya when waves reached a height of 1.6 m in Tahara and 1 m in Nagoya [11]. Moreover, Mediana Tectonic Line, the longest fault system in Japan, runs near Mt. Hōrai, Toyokawa city and along Atsumi Peninsula, all in Aichi Prefecture. It is also very dangerous because it is active zone. In 1995 Great Hanshin Earthquake hit Kobe causing many damages. It’s epicenter was in Nojima Fault, one of MTL faults system. Such configuration can occur devastating earthquakes. Page 180 Conference Proceedings ICIL 2016 ISBN 978-83-62079-06-3 It seems that even if the strong earthquake occur in Nankai Through and cause high tsunami, most of the Toyota Group plants will be safe because of distance from the sea. But there are two locations of plants Tahara and Heikinan in serious danger. Another reason of hazards is in Mediana Tectonic Line. If epicenter will be in that fault in Aichi Prefecture losses can be unpredictable huge for surrounding area including Toyota and other plants. Damages to roads and bridges may cause interruption of the supply chain. 2.2. Tōhoku Region This region is exposed to natural disaster because of location to Japan Trench, part of the Pacific Ring of Fire. This is zone of subduction of Pacific Plate under Okhock Plate (bounded on the north by the North American Plate) and continuing movement of the plate can causing tsunami after quakes. Moreover in Miyagi Prefecture area there are several active faults. Toyota Plants (Toyota Motor East Japan Inc.): Kanegasaki, Iwate prefecture, Ōhira, Taiwa, Miyagi Prefecture. Kanegasaki is located inland in the valley / plane between the mountains. This place is far from the sea and it is safe from tsunami. But in this area there is active Kitakami Teichi Seien fault zone in which can occur afterquake caused by mainquake with epicenter in Japan Trench. Aftershakes may cause damages in landform. Roads cracks, bridges collapse, landslides, liquidation of soil – all of this interrupted supply chain for Toyota Plants. Ōhira village lies near Taiwa town, both located in Miyagi Prefecture in about 20 km from the coast. This area after 2011 Tōhoku earthquake was safe from tsunami, but was affected by many interruptions of roads (see, Figure 3).

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