Automotive Supply Chain Risk Digest #406

November 8 - 14, 2024, by Elm Analytics

Contents

BANKRUPTCY

• Neta secures funds for restructuring

CHANGE IN MANAGEMENT

• Hyundai names new global CEO

EXPANDING

• Toyota invests $1.45B in Mexico plants

• Westcast plans $12M Michigan facility

• EcoPro expands precursor, cathode production

HUMAN CAPITAL

• Mobis to lay off 210 workers

• Webasto cuts 218 Michigan jobs

• Stellantis transitioning Detroit facility

INDUSTRY DIRECTIONS

• Automakers push supply chain collaboration

LABOR DISPUTE

• Hyundai Transys strike ends, negotiations unresolved

• GM avoids strike with UAW agreement

MERGERS, VENTURES, ACQUISITIONS

• VW and Rivian form joint venture

• Geely merges Lynk & Co with Zeekr

• AundE acquires majority stake in TB Kawashima

• Lyten acquires Northvolt manufacturing assets

OPENING

• Mubea opens $54M Mexico facility

• Toyota plans new Tijuana plant

PRODUCTION DECREASE

• Ford reduces Cologne EV plant output

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Bankruptcy

China's Neta, part of Hozon Auto, has received financial support from the Nanning Industrial Investment Group, which is connected to the local government. This support will help Neta with buying raw materials, production, logistics, and exporting from its factory in Nanning.

Even though the company faces financial difficulties and may need to lay off up to 70% of its staff in some areas, Neta is working on restructuring to become more efficient and cut costs by more than half. The goal is to have a positive cash flow by February 2025.

Change In Management

Hyundai Motor Co has announced that Jose Muñoz, the company's COO and CEO of Hyundai and Genesis Motor North America, will become the global CEO on January 1, 2024. Jaehoon Chang, the current CEO, will transition to a new role as vice chair of Hyundai Motor Group's Automotive Division.

Expanding

Toyota has announced a $1.45B expansion to modernize its Baja California and Guanajuato plants in Mexico to manufacture the next-generation Tacoma pickup, including a hybrid version.

Westcast Industries, a subsidiary of China-based Bohong Group, plans to invest $12M in a new CNC machining facility in Auburn Hills, Michigan. The plant, set to occupy a 127k sq ft former GKN Automotive building, will support existing Ford and Volvo engine exhaust manifold programs while taking on additional work for General Motors.

EcoPro plans to boost the production of precursor and cathode materials to 255k tons and 710k tons by 2030. The company will establish a joint venture with China's GEM to create a vertically integrated system in Indonesia, which will involve nickel smelting and precursor production while adhering to the US IRA guidelines. Additionally, EcoPro is working on merging EcoPro Innovation and EcoPro CNG to integrate lithium extraction and refining technologies.

Human Capital

Mobis, Hyundai's parts and service arm, announced it will permanently lay off 210 employees at its Toledo, Ohio, facility by January 5, 2025, citing a "loss of customer orders."

The layoffs, which affect assemblers and maintenance technicians, follow Stellantis' recent decision to cut Jeep Gladiator production at its Toledo Assembly Complex, resulting in 1.1k layoffs. Mobis had received a $32.6M Department of Energy grant to produce battery boxes for the Gladiator plug-in hybrid, but reduced orders have forced the company to downsize.

Webasto Roof Systems plans to lay off 218 workers at its Plymouth Township and New Hudson plants in Michigan due to reduced production volumes $ from a customer, effective December 16, 2024. The Plymouth plant, which supplies sunroofs and hardtops for the Ford Bronco, will lose 156 employees, while 62 will be cut from the New Hudson location.

Although Ford declined to confirm its involvement, Bronco production is reportedly unaffected. The layoffs follow Ford's recent suspension of F-150 Lightning production amid low demand and declining Bronco deliveries, down 16% this year.

Stellantis plans to lay off 400 unionized workers at its Freud Street parts sequencing facility in Detroit, Michigan, early next year. The company is transitioning the facility's operations to a third-party provider as part of a broader effort to realign its US operations for 2025.

Industry Directions

At the 2024 MEMA Original Equipment Suppliers Annual Conference, leaders from GM, Toyota, and Nissan talked about the importance of being more open with their suppliers as they change their plans for EV production. They recognized that suppliers have faced difficulties after spending money to focus on EVs, only to see car makers delay or lower their electrification goals.

Toyota's Ryan Grimm stressed the need for over-communication and regular check-ins on how suppliers are doing. Nissan's Andrew Wareing mentioned the importance of helping suppliers retain their workforce and adopt new technology. GM's Tanya Skilton called for efforts to cut down on inefficiencies while maintaining stability in operations.

The car manufacturers committed to partnering with suppliers to strengthen the supply chain and support local sourcing, especially as market conditions change. They expressed a desire to be proactive in identifying potential issues $ in their supply chains rather than just responding to problems after they occur, such as a factory shutting down or unexpected spikes in the cost of essential materials.

Labor

Hyundai Transys workers have returned after a monthlong strike at its transmission plant in South Chungcheong, Korea, with executives agreeing to return 20% of their salaries to help normalize operations.

The strike, which began on October 8, disrupted Hyundai Motor's production of the Kona SUV, forcing a four-day shutdown at its Ulsan No. 1 plant. Hyundai Transys CEO Steve Yeo called the situation the company's "most serious crisis since its foundation," citing the need for a collective effort to stabilize the supply chain.

The labor union, which seeks a wage increase and incentives tied to sales, has resumed work, though negotiations remain unresolved.

The UAW Local 2209 and General Motors have resolved a staffing-related contract dispute at GM's Fort Wayne Assembly plant in Indiana, avoiding a potential strike. The agreement addresses concerns over GM's reassignment of employees from first to second and third shifts and the use of managers to perform union members' jobs. The Fort Wayne plant employs 4.1k workers and produces the Chevrolet Silverado and GMC Sierra light-duty pickups.

Mergers, Ventures, Acquisitions

Volkswagen and Rivian have formed a joint venture, Rivian and VW Group Technology, with Volkswagen increasing its investment in Rivian to $5.8B, including a 50% stake in the venture. Initially focused on software development for EVs, the venture may expand to include battery modules and other technologies.

This partnership strengthens VW's EV software capabilities, which is a noted weakness for the automaker. The collaboration is part of Volkswagen's broader strategy to increase its US market presence and will also support VW's Scout brand, set to launch EV pickups and SUVs in 2027.

Geely is working to merge its Lynk & Co brand with its fast-growing Zeekr division. This move aims to use resources better and focus more on NEVs. While Lynk & Co will keep its brand name, it will get closer to Zeekr in areas like finances and purchasing.

German automotive supplier AundE has acquired an 80% stake in TB Kawashima, a Toyota Boshoku subsidiary that produces technical textiles for the automotive sector. Following the November 1 transaction, TB Kawashima has been renamed AundE Boshoku.

Lyten, a battery startup based in Silicon Valley, has acquired manufacturing assets from Northvolt, a troubled Swedish battery manufacturer. This deal includes equipment and a lease on Northvolt's Cuberg facility in San Leandro, California.

Lyten plans to invest $20M to expand this San Leandro site and its operations in San Jose, focusing on producing lithium-sulfur batteries. With this acquisition, Lyten will be able to produce 200MWh of batteries, generating revenue while they work on a larger plant in Nevada that is set to open in 2027.

On the other hand, Northvolt has faced several challenges, such as missed delivery deadlines, layoffs, and paused factory expansions, as it struggles to raise nearly $1B to stabilize its operations.

Opening

German automotive supplier Mubea CCS has inaugurated a $54.1M facility dedicated to manufacturing chassis components in Ramos Arizpe, Coahuila, Mexico.

Toyota also announced plans to invest $336M in a new automotive plant in Tijuana, Baja California, Mexico, eventually employing 1.2k workers.

Production Decrease

Ford plans to reduce production at its Cologne EV plant in Germany due to "rapidly deteriorating market conditions for electric vehicles," with employees alternating work weeks until the Christmas holidays. The plant, which produces the Electric Explorer and Capri EV models, is reportedly manufacturing more vehicles than it can sell.

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