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Elm Analytics - Automotive Supply Chain Risk Digest #111 - March 22 - 28, 2019

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Automotive Supply Chain Risk Digest

March 29 · Issue #111 · View online
Weekly highlights of the events that impact supply chain risk within the automotive industry.

HUMAN CAPITAL
FCA is shortening shifts at its minivan plant in Windsor, Ontario to adjust for inventories. The move comes after the automaker already idled the plant three times in 2019.
PSA Group’s Opel nameplate is planning to cut between 350-400 jobs at its plant in Vienna, Austria. The cuts are reportedly due to the expiration of a large order for gearboxes.
LITIGATION
Jaguar Land Rover has won a court case against Chinese automaker Jiangling Motor for selling a copycat version of its Evoque model. The ruling has added significance since the case was won in a Beijing court.

MERGERS, VENTURES, ACQUISITIONS
Honda and Hino Motors are joining a venture with SoftBank and Toyota for developing self-driving car services in Japan. Each automaker will invest around $2.27m and take a 10% stake.
In a partnership with Chinese automaker Geely, Daimler is relaunching the Smart microcar brand in China. All future models will be built in China with global sales set to begin in 2022.
ZF Friedrichshafen will buy driver assistance system supplier Wabco for more than $7b. The deal is expected to close in 2020.
PLANT CLOSING
Ford’s Russian JV Ford Sollers is planning to exit the passenger vehicle market in Russia and will close two assembly plants and an engine factory there. The restructuring will see Russia’s Sollers take full control of the venture.
PLANT EXPANSION
Detroit auto suppliers Erae AMS USA and Concord Tool and Manufacturing are expanding their Michigan operations with help from the state. Erae AMS will invest $17m into a new plant in Pontiac, while Concord Tool will put $8.8m into expanding their operations in Mt. Clemens.
PLANT OPENING
Volvo has opened a new headquarters for the Asia Pacific region in Shanghai. The over 2m sf facility will house R&D, engineering, design, and administrative operations.
PLANT SHUTDOWN
FCA is idling two assembly plants in Ontario for two weeks each in April. The Windsor assembly plant will be down the weeks of April 8 and April 15, while the Brampton assembly plant will be down the weeks of April 1 and April 8.
PRODUCTION DECREASE
British car production dropped 15% in February due to a fall in demand in China and Europe. The drop marks the country’s ninth straight month of declining production.
REGULATION
Days before the start of more high-level trade talks between the US and China in Beijing, China’s industry minister announced that China would reduce its influence over operations in the manufacturing sector.
Meanwhile, the Chinese government has halved the subsidies for new energy vehicles.
The European Parliament has set new targets on C02 reduction. More stringent limits are expected to drive the transition to electric vehicles.
The European Commission’s WLTP testing procedures have changed. This is to prevent automakers from manipulating results to weaken future targets.
The EU is also planning to require that cars sold in Europe after May 2022 be equipped with speed limiters and driver attention monitors. The European Commission says that speed limiters alone could reduce road fatalities by 20%.
RISK ANALYTICS
2019 will be the year of automotive cost cutting. Technological change, geopolitical and regulatory uncertainty has become the perfect storm of risk.
SUPPLY CHAIN
Rich Weissman at Supply Chain Dive on procurement struggles:
We often joked: “They didn’t just fire Fred. They put him in purchasing so he could really be punished.”
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