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Elm Analytics - Automotive Supply Chain Risk Digest #163 - March 20 - 26, 2020

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Automotive Supply Chain Risk Digest

March 27 · Issue #163 · View online
Weekly highlights of the events that impact supply chain risk within the automotive industry.

THE AUTOMOTIVE MANUFACTURING PLANT CORONAVIRUS SHUTDOWN
THE AUTOMOTIVE MANUFACTURING PLANT CORONAVIRUS SHUTDOWN
CHANGE IN MANAGEMENT
Mitsubishi Motors North America has announced Yoichi Yokozawa as its new CEO. Yokozawa will replace Fred Diaz, who is leaving the company after two years as CEO.
Hyundai Motor North America has named industry vet Steve Gehring as its new executive director of safety regulations and policy. Gehring previously worked for the Association of Global Automakers and the Alliance for Automotive Innovation.
HUMAN CAPITAL
Nissan has laid off 3k workers across three of its plants in Spain due to coronavirus production suspensions there. An official from the automaker said the decision to lay off is a result of what is beyond the automaker’s control.
Volkswagen is introducing “short-time working” for around 80k employees in Germany as a result of the coronavirus pandemic. The reduced hours will be implemented at the automaker’s factories in Lower Saxony, Hessen, and Saxony until April 3.
GM’s salaried workforce is taking a temporary 20% pay cut for six months to help get through the pandemic. The difference will be paid back within the year.
INDUSTRY DIRECTIONS
Ford is working with 3M and GE Healthcare to increase the production of respirators and ventilators that are desperately needed to combat the coronavirus outbreak. GM and Tesla have also made similar announcements about helping to produce medical supplies.
LABOR DISPUTE
Laid-off workers at Faurecia’s Fradley facilities in the United Kingdom are upset that they may not be registered for government furlough.
LITIGATION
Ford recalled over 250k Fiestas, Fusions, Milans, MKZs, and E-Series vans over three separate issues regarding potentially faulty door hardware, wire harnesses, and brake pedals.
MERGERS, VENTURES, ACQUISITIONS
ABB has purchased a majority stake in EV battery charging station producer Chargedot Shanghai New Evergy Technology Co. The deal will strengthen ABB’s ties with leading Chinese EV makers.
PLANT EXPANSION
Hyundai supplier Seoyon E-Hwa Interior Systems is investing over $5M to expand its plant in Selma, Alabama. The expansion will add 60 jobs at the plant.
PLANT OPENING
Suzuki subsidiary Suzuki Thilawa Motor will invest $109M into a new car assembly plant in Myanmar. The plant will have an annual production capacity of 40k units and will start operations in September 2021.
PLANT SHUTDOWN
Swedish bearings maker SKF shut down its plants in Italy, Spain, and France last week for at least 7-10 days amid the coronavirus outbreak. The supplier said they are taking “major steps to reduce the impact…including closure of sites, reducing costs, number of employees, and increasing flexibility within the workforce.”
Leoni Wiring Systems will pause production in Europe, North Africa, and the Americas and implement short-time work in Germany in response to the plant closures at many automakers due to coronavirus. They will also apply for financial aid from the German government.
American Axle halted production at its facility in Fraser, Michigan, this week after days of pressure by employees and the UAW over coronavirus concerns. At the end of last week, an employee at the facility tested positive for the virus.
PRODUCTION DECREASE
Vishay, a large automotive semiconductor manufacturer, is experiencing disruptions in France, Italy, Dominican Republic, Philippines, Malaysia, and India. However, the manufacturer’s Chinese facilities are “essentially fully operational.”
PRODUCTION INCREASE
While it is still early in the game, China is slowly emerging from its months-long shutdown.
Saint-Gobain Sekurit has restarted operations in its Chinese factories. Its facilities in Wuhan produce automotive glazing solutions.
REGULATION
Several major Chinese cities are relaxing quotas on new vehicle license plate registrations to encourage sales. New vehicle sales tumbled 82% in February and are struggling to gain traction in March.
RISK ANALYTICS
As countries and regions will recover from COVID-19 at different rates, “This is really the time to invest in ways to do rapidly updating scenario analysis, multiple scenarios, to envision what the future could look like.”
JD Power is estimating an 80% or more drop in new car sales this month for US states that have implemented lockdown orders due to the coronavirus. Analysis by the firm has shown that auto sales declined 22% nationwide yearly and as much as 40% in some west coast cities through the week of March 22.
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