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Elm Analytics - Automotive Supply Chain Risk Digest #29 - August 26 - September 1, 2017

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Automotive Supply Chain Risk Digest

September 1 · Issue #29 · View online
Weekly highlights of the events that impact supply chain risk within the automotive industry.

A fire burns at the flooded plant of Arkema in Crosby, Texas, Aug. 31, 2017. (Adrees Latif/Reuters)
The aftermath of Hurricane Harvey is just beginning to surface.
This week’s supply chain show stopper was the explosion at the Arkema chemical plant in Crosby, Texas
The plant lost power and the temperature sensitive organic peroxides, that the plant produces, chemically reacted and their containers burst from pressure.
The issue with organic peroxides is that they decompose spontaneously and explosively. They are highly flammable and become unstable when exposed to heat or mechanical shock.
Arkema’s Crosby plant produces organic peroxides under the brand name Luperox.
Automotive parts that use Luperox include:
- hoses
- mirror housings
- seals coatings
- o-rings
- headlight assemblies
- engine oil additives
- body panels
- structural parts
- fiber-reinforced plastics
- composites
Events of this magnitude remind us of the importance of risk management and supply chain resilience.
With data from the USGS WaterWatch, we’ve put together a report of chemical facilities are in similar conditions. The calculations are based on water & flood levels, elevation and location.
We’d love to hear from you with thoughts and questions.
- Tor & Nick
INDUSTRY DIRECTIONS
39 companies can now test autonomous vehicles on Californian roads.
MERGERS, VENTURES, ACQUISITIONS
Renault-Nissan and Dongfeng have formed a new joint venture to develop electric vehicles in China. eGT New Energy Automotive will be based in Shiyan, Hubei Province. The electric vehicle will be made at Dongfeng’s Shiyan plant, which has a manufacturing capacity of 120,000 vehicles a year.
Torc Robotics is partnering with NXP Semiconductor on self-driving systems. Torc will use NXP’s radar-specific chips for 360-degree imaging in a consumer market offering.
Toyoda Gosei is acquiring 100% of Pecval Industria Co., its JV in Brazil with Shimizu Industry Co., Ltd. TG says that making the company a full subsidiary strengthens their supply system for interior and exterior parts.
German ZF sold its Body Control Systems unit to China’s Luxshare for less than $1b. The division makes interior switches, controls, displays and integrated electronic panels. In May 2017, ZF began working with Faurecia to develop interior technologies for autonomous cars, reducing the need for ZF to keep its own unit.
Delphi Automotive has taken a minority stake in Israel’s Innoviz Technologies. The company is developing cheaper, solid-state LiDAR systems.
Composites may see new advancements through a new European consortium. Faurecia, Polynt, Mahr are working with Aachen University’s Institute of Plastics Processing to develop new sheet molding compound (SMC) materials.
PLANT CLOSING
Norwegian Kongsberg Automotive is moving its Easley, South Carolina production facility to Mexico. The plant produces hose and tube assemblies and will move in early 2018. Kongsberg stated, “A very competitive market in the area of the Easley products has led this plant to an uncompetitive position.”
PLANT DISASTER
More fires are expected at Arkema’s flooded chemical plant in Crosby, Texas. Officials have evacuated a 1.5m radius around the plant.
PLANT EXPANSION
Germany’s Dr. Schneider has expanded its plant in Radomierz, Poland. The facility produces plastic components for ventilation, interior panels and consoles.
Delphi is adding 100 new employees to the existing 60 engineers working on autonomous vehicles in Pittsburg.
PLANT OPENING
GM suppliers and sister companies Android Industries and Avancez are investing $14.7m into expanding Android’s existing plant and a adding new Avancez plant near GM’s Fort Wayne assembly plant. The new plants will create up to 313 new jobs by the end of 2018.
PRODUCTION INCREASE
Vehicle imports and exports from Mexico are up a whopping 34% and 46% respectively for the first half of 2017. The Altamira Port Administration attributed the increase mainly to increased production from Kia at their new plant in Pesqueria.
Japan’s Tanaka Chemical is boosting production to meet demand for cathodes used in electric vehicles. The surges in the electric vehicle supply chain have also affected prices and demand for lithium, cobalt, nickel and graphite.
REGULATION
US and Canadian trade official and labor advocates are aiming to use NAFTA negotiations to get Mexico to raise its stagnant wages. Peter Navarro, a trade adviser to Trump, says that by not raising wages “Mexico will never have a robust middle class, and our middle class will wither if not die.”.
Production has resumed at four Hyundai plants in China after last week’s shutdown. The shutdown was a byproduct of a government dispute over a US missile defense system (THAAD) deployed in South Korea. Hyundai had failed to pay Chinese State owned BAIC Motor Corp an estimated $17m, and the supplier refused to deliver fuel tanks.
RISK ANALYTICS
With as many as 500,000 vehicles destroyed and potential delays on 20,000 to 40,000 new vehicle sales, the automotive industry in Southeast Texas is feeling the impact from Hurricane Harvey.
SUPPLY CHAIN
The Port of Houston, the nation’s largest port for foreign waterborne tonnage, has reopened following Hurricane Harvey.
A step toward resuming operations at seven refineries, the Port of Corpus Christi has reopened with limited traffic.
How can a part that only costs a few pennies halt a supply chain? A new trend of long lead times for passive electronic components are delaying vehicle programs.
Toyota is getting ready for an expected surge in electric vehicles. It’s purchasing unit and “in-house venture company” are evaluating components for making batteries, motors and transaxles from North American suppliers.
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