Elm Analytics - Automotive Supply Chain Risk Digest #287 - August 5 - 11, 2022

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Automotive Supply Chain Risk Digest

August 12 · Issue #287 · View online

Weekly highlights of the events that impact supply chain risk within the automotive industry.


BANKRUPTCY
Gissing North America LLC filed for Chapter 11 bankruptcy. The company manufactures acoustic and cargo management systems for Tesla, GM, Ford, Toyota, Nissan, and Honda. Several of its customers have agreed to keep the supplier afloat pending approval. Gissing is the first known metro-Detroit auto supplier to file for bankruptcy related to the COVID-19 pandemic.
Didi and Li Auto’s Chinese joint venture also filed for bankruptcy. Beijing Judian Chuxing Technology was formed in 2018 to make EVs for Didi’s ride-hailing services.
CHANGE IN MANAGEMENT
Nikola’s Michael Lohscheller will take over for CEO Mark Russell when he retires at the end of the year. Lohscheller assumed the role of president immediately and joined the board. He was previously CEO of Adam Opel AG. Russell became CEO in 2020 when Nikola founder Trevor Milton was accused of defrauding investors.
Canada’s Unifor has elected Lana Payne as its new national president. She replaces Jerry Dias, who unexpectedly retired in March. The union’s National Executive Board had accused him of accepting $50k from a supplier of COVID-19 test kits he helped promote.
VW’s CEO Oliver Blume will reportedly reduce the number of management board seats from 12 to 8 or 9.
DISASTER
A tank operator at Tribar Technologies in Wixom, Michigan, overrode an alarm 460 times in 3h, releasing 10k gal of acid etch material into the public wastewater system. Hexavalent chromium in the solution is a toxic chemical used to produce chrome-finished parts.
GM canceled production at its Orion Assembly Plant Thursday due to a possible homicide. The altercation, which reportedly involved two co-workers from a cleaning service, resulted in the death of one of the individuals.
EARNING DIP
Analysts are watching Rivian as it more than doubled its operating expenses from Q1. Production rose from 2.5k in Q1 to 4.4k in Q2.
LABOR DISPUTE
The 7k workers at VW’s Puebla assembly plant in Mexico unexpectedly rejected the 9% pay raise their union negotiated.
MERGERS, VENTURES, ACQUISITIONS
Kongsberg is selling its share of its Shawinigan operations in Canada to BRP for $106M. The location produces sensors, actuators, electronic power steering, wire harnesses, and dashboard assemblies.
Tata’s TPEML signed a contract with Ford India to take over its plant in Sanand, Gujarat, India, to manufacture EVs.
OPENING
Norma Group will open a new plant in Guangzhou, China. The plant will produce thermal management systems for nearby EV manufacturer GAC.
According to a government filing, Tesla is lobbying in Ontario, Canada, to set up a new manufacturing facility.
PRODUCTION INCREASE
China Association of Automobile Manufacturers reported July auto sales were up 29%. Although COVID lockdowns are down, YTD sales are still down 2% compared to 2021.
REGULATION
The CHIPS and Science Art, signed into law this week, may not solve any short-term problems related to semiconductor supply chains. However, it does set aside $52B for US semiconductor research, design, and production. The bill allows a 25% tax credit for semiconductor manufacturing through 2026. It also sets aside $2B for “legacy chips” used in the auto industry.
California’s DMV has accused Tesla of misleading consumers by claiming its vehicles were autonomous. If its complaints to the Office of Administrative Hearings move forward, Tesla might be unable to sell cars in the state.
RISK ANALYTICS
Slowing chip demand may suggest an industry downturn:
“We continue to believe we are entering the worst semiconductor downturn in at least a decade, and possibly since 2001 given the expectation of a recession and inventory build,” Christopher Danely, a Citigroup Inc. analyst, said in a report. “We expect every company in our coverage universe and every end market to experience a correction.”
SUPPLY CHAIN
Hapag-Lloyd’s growth in its container ship fleets is larger than demand. CEO Rolf Habben Jansen:
“Over the upcoming 24 months, we clearly see that supply growth will outpace demand growth.”
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