Automotive Supply Chain Risk Digest #378
Automotive Supply Chain Risk Digest #378
April 26 - May 2, 2024, by Elm Analytics
Contents
More Layoffs at Fisker
Toyota Promotes Top Executives
Volvo Top Board Changes
New CEO at Benz AL Before Union Vote
A2Mac1 Closes Michigan Hub
Stellantis Hires in Low-Cost Countries
Volkswagen Offers Termination Buyouts
Tesla Layoffs Affect Supercharger Expansion
Tesla Abandons Gigacasting Technique
NYTimes: China's EVs Improving
Stellantis' Potential Strike Vote
Mergers, Ventures, Acquisitions
ZF Foxconn Joint Venture Formed
Lear Acquires AI Automation Firm
DOMO Chemicals Expands in China
GAC Opens Malaysia CKD Factory
Sona BLW Opens Mexico Plant
Maruti Suzuki's Expansion Strategy
Rivian Restarts Enhanced Illinois Plant
Xiaomi's Rapid EV Production
Mercedes-Benz DOJ Investigation Concludes
Stellantis Resumes After Supplier Strike
Bankruptcy
Fisker is implementing another round of layoffs to conserve cash amidst financial difficulties. Founder and CEO Henrik Fisker communicated this decision in an internal email, emphasizing the need to keep various business options viable, including potential sale of the company or capital infusions. These layoffs indicate severe liquidity constraints, posing significant risks to the stability and continuity of their operations.
Change In Management
Toyota Motor North America has expanded the roles of EVPs Jack Hollis and Chris Reynolds, promoting Hollis to COO and Reynolds to Chief Strategy Officer.
Volvo has promoted Francesca Gamboni, Anders Bell, and Erik Severinson to the Executive Management Team, its top board. This change follows the departure of COO and Deputy CEO Javier Varela, who is leaving after eight years to pursue new opportunities.
Of note: Mercedes-Benz appointed Federico Kochlowski as the new CEO of its Alabama plant, just ahead of a critical union vote scheduled for May 13 and 17.
Closing
A2Mac1, a French automotive data company, is set to close its only US location in Belleville, Michigan, losing 70 jobs. This hub, responsible for about 25% of the company's work involving benchmarking carmakers' vehicles, will cease operations on June 3, 2024. The closure is detailed in a WARN Act notice, affecting a facility pivotal in weighing parts, measuring dimensions, and other analytical tasks for clients such as Stellantis and Tesla.
Human Capital
Stellantis is strategically hiring most of its engineers in lower-cost countries such as Morocco, India, and Brazil, where annual salaries average around $53k, as part of a cost-saving measure amidst slowing demand for EVs. This initiative, targeting 2/3 of the company's engineering workforce in these regions, aligns with efforts to produce more affordable vehicles like the electric Citroen e-C3 and responds to competitive pressures from other global automakers and declining European profitability.
Volkswagen Group is offering nearly $1B in bonuses to administrative staff in Germany who choose to terminate their contracts early as part of a strategy to reduce personnel costs. Volkswagen believes this move is crucial to streamlining its operations and maintaining competitiveness against fast-growing automotive brands in the EU, particularly from China.
Tesla has recently laid off around 500 employees from its unit responsible for constructing electric vehicle charging stations. This move has created uncertainty regarding the future expansion of its US Supercharger network.
These layoffs come after Tesla's agreements with other automakers, such as General Motors and Ford Motor, to allow access to its charging stations. Furthermore, there has been an organizational shift towards maintaining existing stations rather than building new ones.
This reduction in workforce could affect Tesla's ability to expand its charging infrastructure, which may significantly impact the broader electric vehicle market and Tesla's strategic position within it.
Industry Directions
Tesla has discontinued its advanced gigacasting technique, which aimed to create vehicle underbodies from a single piece, reverting to its established three-piece method. This decision reflects a shift amid economic challenges such as falling sales and heightened competition, particularly from Chinese EV manufacturers. The change also aligns with Tesla's increased focus on developing autonomous vehicles rather than expanding EV sales volumes.
NYTimes: China's Electric Cars Keep Improving, a Worry for Rivals Elsewhere
Labor
Around 1.1k workers at Stellantis' Warren Stamping Plant in Michigan will vote on May 6 to authorize a strike over unresolved health and safety issues. The strike could affect the production of key models like Ram pickups and Jeep vehicles.
Mergers, Ventures, Acquisitions
ZF Friedrichshafen AG and Foxconn have completed their joint venture, ZF Foxconn Chassis Modules, to produce passenger car chassis systems. This 50/50 partnership, centered around the ZF Chassis Modules GmbH, leverages Foxconn's supply chain expertise and ZF's engineering skills to target growth in axle system assembly and expand into new markets.
Lear Corp. is acquiring WIP Industrial Automation, a Spanish company specializing in automation and artificial intelligence, to combat rising labor costs, particularly from wage inflation. The acquisition, part of Lear's strategy to enhance operational efficiencies globally, is expected to close by the third quarter of 2024. This move follows Lear's efforts to integrate robotics to address increasing labor costs worldwide, notably in Mexico, which employs over 50k workers across 40 plants.
Opening
This week’s plant openings and announcements:
DOMO Chemicals has inaugurated a new 431k sq ft production facility in Haiyan, Jiaxing, Zhejiang, China. The new plant expands its existing polyamides (nylon) capacity from 25k to 50k tons annually.
GAC Motor and WTC Automotif opened their first overseas CKD factory in Segambut, Kuala Lumpur, Malaysia. The factory has a production capacity of 34.4k vehicles annually.
India's Sona BLW Precision Forgings opened a new plant in Silao, Guanajuato, Mexico, to produce transmission systems for EVs. The 269k sq ft facility focuses on differential assemblies and reduction gears.
Maruti Suzuki has announced a strategic expansion plan, committing to commissioning one new plant annually and having two new plants under construction each year through FY31 to bolster its presence in the growing Indian market. The company aims to nearly double its production capacity to 4M units by FY31, with significant investments anticipated from both Maruti Suzuki and its auto component vendors to support this growth.
Production Increase
Rivian finished a significant upgrade during a shutdown in April and has restarted production at its Normal, Illinois plant. The company expects the updates to improve production margins significantly, with Rivian expecting to profit by the year's end. The plant, acquired initially from Mitsubishi in 2017, is preparing to produce the upcoming R2 SUV, initially planned for a new Georgia facility.
Xiaomi has manufactured 10k units of the SU7, its first EV, within 32 days of its launch. The Chinese electronics giant, traditionally known for smartphones, entered the vehicle manufacturing market by announcing its EV arm, Xiaomi Automotive, in 2021. Demand for its new car has been an impressive 75k orders within 28 days of launch. To meet the escalating demand, which initially created a 7-month waitlist, Xiaomi has ramped production and aims to deliver 100k SU7 EVs this year.
Regulation
The US DOJ concluded its 8y investigation into Mercedes-Benz over diesel emissions without filing charges. This decision follows a $1.5B settlement in 2020 between Mercedes-Benz and various regulatory bodies, including the DOJ, EPA, and California Air Resources Board, over separate allegations of emissions cheating related to the Clean Air Act and California state law. The original investigation began in 2016, shortly after the Volkswagen emissions scandal, prompted by a class action lawsuit alleging that some Mercedes-Benz vehicles did not meet emissions standards.
Shutdown
Stellantis will restart production at three European assembly plants in early May, following disruptions caused by a workers' strike at supplier MA France.
The affected plants, located in Poissy and Hordain in France and Luton in Britain, had been shut down since the previous week due to the strike at MA France, which produces stamped metal parts. The Poissy plant resumed operations on May 2, while the Hordain and Luton plants will restart on May 7.
Stellantis has managed to find alternative solutions for sourcing the necessary parts, allowing production to continue. A spokesperson highlighted that Stellantis handles specific production processes such as stamping and welding internally, aiding their resilience against supply chain disruptions.