Automotive Supply Chain Risk Digest #401
October 4 - 10, 2024, by Elm Analytics
Contents
BANKRUPTCY
Northvolt subsidiary files bankruptcy after gigafactory expansion canceled
CHANGE IN MANAGEMENT
Stellantis announces CEO succession plan and management shake-up
DISASTER
Linamar confirms all employees safe after Hurricane Helene
High-purity quartz production resumes after Hurricane Helene disruption
EXPANDING
Continental expands Thailand tire plant by 3M tires annually
JSW Group plans $4.8B battery manufacturing facility in India
LABOR DISPUTE
Dockworkers strike ends, averting supply chain disruption
LITIGATION
Stellantis sues UAW over strike threats related to $18.9B US investments
OPENING
GM announces new battery cell development center in Michigan
PRODUCTION INCREASE
Hyundai starts production at Georgia plant ahead of schedule
REGULATION
EU imposes up to 45% tariffs on Chinese electric vehicles
RISK ANALYTICS
Foley & Lardner warns of supply chain compliance risks from proposed rule targeting connected vehicles
SHUTDOWN
GM resumes production in Michigan and Texas after hurricane-related disruption
Bankruptcy
Northvolt Ett Expansion AB, a subsidiary of Swedish battery manufacturer Northvolt, has filed for bankruptcy after the cancellation of a project to expand its gigafactory in northern Sweden. The unit had debts ranging from $194M to $290M and was responsible for a planned tripling of the factory's capacity.
Northvolt canceled the expansion project to safeguard its financial stability amid ongoing consolidation efforts. The bankruptcy filing does not impact the rest of the Northvolt Group. The company, which is dealing with economic challenges, has recently reduced its workforce and scaled back operations.
This bankruptcy raises concerns about Northvolt's ability to increase production, which is crucial for Europe's competitiveness in the EV battery market, especially given the growing competition from China.
Change In Management
Stellantis announced that CEO Carlos Tavares will retire in early 2026, prompting the search for a successor by late 2025.
The company also revealed significant management changes $ as it grapples with declining profits and market share in the US.
CFO Natalie Knight and North America COO Carlos Zarlenga will step down, with Antonio Filosa assuming the North America COO role and Doug Ostermann becoming CFO.
The leadership shake-up follows Stellantis's struggles with bloated inventories and weakening US sales, which have led to a steep profit guidance cut and a stock drop of over 40% this year.
Disaster
Canada's Linamar confirmed that all employees at its two plants in western North Carolina, located in Asheville and Mills River, are safe after Hurricane Helene caused widespread landslides and flooding.
Both facilities lost power, with significant flooding at the Mills River plant, where power was only restored on October 4. About half of the 469 workers were initially unreachable. While operations are slowly resuming $, recovery efforts are ongoing, and the full extent of the damage is still being assessed.
Sibelco, one of two companies in Spruce Pine, North Carolina, that produce high-purity quartz for semiconductors, has restarted production after shutting down due to Hurricane Helene. The company is gradually ramping up to full capacity and has resumed shipments.
The Quartz Corp, another major quartz producer in the area, remains offline as it awaits infrastructure repairs. Spruce Pine quartz is critical for global semiconductor manufacturing, with up to 90% of crucibles used in silicon chip production made from this quartz.
Any prolonged disruption in semiconductor supply could lead to delays in automotive production, particularly for EVs and advanced vehicles that heavily rely on these chips.
Expanding
Continental is expanding production at its tire plant in Rayong, Thailand, by an additional 3M tires annually. This $315M expansion will bring the total workforce to over 1.5k. The Rayong plant produces a range of tires, including those for electric vehicles and motorcycles.
India's JSW Group plans to establish a battery manufacturing facility with a target capacity of 50 GWh by 2028-2030. The expansion will occur in phases, with the first phase achieving 10 GWh by 2026. The project in Cuttack and Paradip, Odisha, involves an investment of $4.8B and will primarily serve JSW's electric vehicle and energy storage subsidiaries.
Labor
The three-day strike by dockworkers along the US East and Gulf coasts ended on October 4, averting significant disruptions $ to the auto supply chain. The strike affected 36 ports and threatened billions in vehicle and parts imports, but analysts now expect minimal long-term impact.
A tentative agreement on wage increases was reached, and normal port operations are expected to resume within three weeks. Automakers and suppliers were preparing contingency plans for extended disruptions, but the industry largely avoided severe consequences.
A prolonged strike could have caused significant bottlenecks in vehicle and parts supply chains, leading to costly shutdowns and delays for the automotive industry.
Litigation
On October 7, Stellantis filed multiple lawsuits against the UAW and several local chapters across Michigan, California, Illinois, Ohio, Indiana, Texas, Arizona, Massachusetts and Oregon.
The lawsuits claim that the UAW's threats to strike over Stellantis' planned $18.9B US investments, outlined in the 2023 Collective Bargaining Agreement, constitute bad faith.
Stellantis argues that the planned investments are contingent on several economic factors, including plant performance and market conditions, and accuses the UAW of disregarding these conditions in their strike threats.
The UAW, however, views planned investments as a "historic gain" and a central bargaining win for its members, which is essential for securing jobs and investments in US plants.
Stellantis seeks a declaratory judgment to prevent the UAW from striking mid-contract and to hold the union liable for potential damages.
Opening
General Motors has revealed plans to construct a new battery cell development center at its Global Technical Center in Warren, Michigan. The goal is to begin battery cell production by early 2027.
The new facility aims to bridge the gap between battery development and mass production, thereby speeding up the launch of new battery technologies. GM also announced that it would discontinue the "Ultium" branding for its electric vehicle batteries but would continue to use the underlying technology.
These announcements are part of GM's broader strategy to enhance the profitability of electric vehicles. GM anticipates a significant increase in profits from EVs in the upcoming year.
Production Increase
Less than two years after breaking ground, Hyundai started producing its Ioniq 5 electric SUVs at its $7.6B manufacturing plant in Bryan County, Georgia. The plant, which will eventually employ 8.5k workers and produce up to 300k EVs annually, celebrated the rollout of its first commercial EVs ahead of schedule.
Although vehicle production is underway with more than 1k workers, the battery facilities are still under construction. Hyundai's quick start is partially driven by US federal EV incentives rewarding domestic production under the Inflation Reduction Act.
Regulation
The European Union has voted to impose tariffs of up to 45% on electric vehicles imported from China, starting October 31, 2024, in response to what it views as unfair trade practices. The tariffs aim to protect Europe's automotive industry, which provides millions of jobs and significant economic output.
While some countries like Germany opposed the move, fearing a potential trade war, others argued it was necessary to level the playing field. The tariffs stem from an investigation into Chinese government subsidies to automakers, and negotiations are ongoing between the EU and China to find a resolution.
These tariffs could lead to tensions between China and Europe, affecting the global automotive supply chain and potentially increasing costs for European automakers dependent on Chinese-made EV components.
Risk Analytics
Shutdown
General Motors resumed production at its assembly plants in Flint, Michigan, and Arlington, Texas, after a temporary halt caused by supplier disruptions from Hurricane Helene.
GM had canceled production at these plants on October 3 and 4 but announced that Flint operations were back up on October 7, with Arlington set to resume later the same day.
The Flint plant produces the Chevrolet Silverado and GMC Sierra, while the Arlington plant manufactures the Chevrolet Tahoe, Suburban, GMC Yukon, and Cadillac Escalade.
The article linked in your Risk Analytics section will be incredibly profound for a lot of companies in the supply chain who provide, or incorporate, VCS items. And in automotive terms, based on my experience of Senior Management teams either ignoring or leaving it to the last possible second, these requirements may cause a lot of issues, very quickly.