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Elm Analytics - Automotive Supply Chain Risk Digest #139 - October 4 - 10, 2019

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Automotive Supply Chain Risk Digest

October 11 · Issue #139 · View online
Weekly highlights of the events that impact supply chain risk within the automotive industry.

CHANGE IN MANAGEMENT
Nissan has appointed its China chief Makoto Uchida as its new CEO to replace Hiroto Saikawa, who resigned last month. They have also appointed former Mitsubishi exec. Ashwani Gupta and former Nissan China head Jun Seki as COO and deputy COO, respectively.
EARNING DIP
GM’s light-vehicle sales fell by 18% in China in the third quarter due in part to the ongoing U.S.-China trade war and by heightened competition in a key mid-priced crossover segment. The drop marks the fifth straight quarterly decline for the automaker in China.
HUMAN CAPITAL
As the UAW-GM strike inches into its fourth week, more than 100 US suppliers have temporarily laid off upwards of 12,000 hourly and salaried workers. The exact number of layoffs and the specific plants affected by the layoffs are currently unclear.
Thyssenkrupp CEO Martina Merz told employees via an internal memo that significant job cuts will be required to aid in the company’s turnaround. In addition to the job cuts, the company is planning to list or sell its elevator division and is willing to sell majority stakes in its car parts and plant engineering divisions.
INDUSTRY DIRECTIONS
NHTSA is seeking public and industry input on whether camera monitoring systems should be allowed to replace rear- and side-view mirrors in future vehicles. The agency was petitioned by Tesla and the Alliance of Automobile Manufacturers to enable cameras instead of traditional mirrors in 2014.
A coalition of major GM shareholders with $1.1T in collective assets is calling on the automaker to join other automakers honoring California’s clean vehicle standards. A letter sent to CEO Mary Barra stresses the need to avoid significant regulatory uncertainty and litigation delay resulting from President Trump’s proposal to roll back rules.
LABOR DISPUTE
Despite UAW-GM talks remaining at a virtual standstill, it appears that negotiations between the union and Ford are moving along quickly.
LITIGATION
NHTSA is investigating Tesla over a software update they released to vehicles in May that was intended to address reports of battery fires. The agency received a “defect position” from a lawyer representing some customers to see if Tesla was hiding a defect in its cars that could have caused the reported fires.
MERGERS, VENTURES, ACQUISITIONS
PSA is reportedly preparing to sell two of its Chinese joint venture plants and lay off thousands of workers. Sales in China have slid from 730k (2014) to 250k (2018) to 64k(Q1+Q2 2019). Financial Times reported the Dongfeng venture is at 22% capacity, and the Changan venture is idled.
Arm, Bosch, Continental, Denso, General Motors, Nvidia, NXP, and Toyota have formed the Autonomous Vehicle Computing Consortium. The group will develop architecture and computing platform recommendations.
James Dyson has called off plans to build an electric vehicle company.
Geely Auto and Volvo are planning to combine their engine operations into a stand-alone business unit. The proposed merger would lower costs, create greater synergy, and facilitate their electrification campaigns.
PLANT CLOSING
Swedish auto parts supplier Haldex is closing its plant in Blue Springs, Missouri, with layoffs starting on December 13. The closure will put 154 employees out of work.
Michelin will close its La Roche-sur-Yon truck tire plant in France by the end of 2020.
PLANT EXPANSION
3M is expanding its production plant in Decatur, Alabama. The new reactor will bring new FKM polymerization capacity. Seals and hoses for turbochargers and fuel lines use the fluoroelastomer.
PLANT OPENING
Sweden’s Gnotec opened its first North American plant in Orangeburg, South Carolina. The 30k sf plant will supply Volvo welded and assembled parts.
PLANT SHUTDOWN
GM has shut down the production of V8 engines and continuously variable transmissions at its plant in Ramos Arizpe, Mexico, as a result of the ongoing UAW strike in the US. The shutdown will idle roughly 415 workers there.
GM has restarted its Ingersoll plant in Ontario, Canada, despite the ongoing UAW strike.
REGULATION
US and Chinese negotiators began their 13th round of trade talks yesterday in Washington, DC. Expectations are low as Beijing has been reluctant to make the kind of substantive reforms that would satisfy Washington.
SUPPLY CHAIN
BMW supplier Plastic Omnium has been experiencing “significant operating difficulties” in ramping up production at its Greer, South Carolina plant. As a result of the production difficulties, the French supplier is lowering its 2019 operating margin outlook to around 6% of sales.
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