Elm Analytics - Automotive Supply Chain Risk Digest #42 - November 24 - 30, 2017

CHANGE IN MANAGEMENT

Toyota is diversifying its management team amidst what the company is calling a "now or never" competition about "surviving or dying" in the new era. Among the changes are the elevation of a woman to a top leadership role within Lexus and promoting more non-Japanese employees to executive roles.

Germany's ZF Friedrichshafen said its chairman, Giorgio Behr, was stepping down. A power struggle between Behr and the company’s owners, over a blocked takeover of Wabco Holdings, was previously reported.

40+ year tire industry veteran Jim Hawk has been appointed the chairman and CEO of Toyo Automotive Parts (USA) Inc. He also serves as president of Toyo Tire North America Original Equipment Sales LLC.

HUMAN CAPITAL

Yanfeng Automotive Interiors has announced plans to layoff 345 workers from its Highland Park, MI plant starting in late January 2018. Yanfeng says the layoffs are a result of a loss of business.

INDUSTRY DIRECTIONS

EV sales are up 46% globally compared to sales in the same period last year. The largest growth came from China where units sales rose by 113,000.

To complement its push for hydrogen fuel cell powered vehicles, Toyota has announced plans to build a new hydrogen generation station in Long Beach, CA that will produce the fuel using cow manure.

LITIGATION

Autoneum North America was fined $224k for safety violations by the Indiana Occupational Safety and Health Administration. In October, an employee suffered multiple blunt force trauma in an accident at the plant in Jeffersonville, Indiana.

Yet another Japanese auto supplier has admitted to falsifying quality data: Toray Industries says that subsidiary Toray Hybrid Cord falsified quality data in 149 instances regarding their strengthening fibers used in tires.

PSA Group has told GM that they want half of their €1.3bn used to purchase Opel back after discovering the full extent of the brand's CO2 emissions challenges. They say they intend to pursue a legal claim on the grounds that they were misled about Opel's emissions strategy.

MERGERS, VENTURES, ACQUISITIONS

Royal Dutch Shell will install ultra-fast charging stations for EVs at 80 European highway sites in 2019. The project is part of an agreement with IONITY, a JV between BMW, Daimler, Ford, and Volkswagen.

Volkswagen AG, Volkswagen China and China's JAC are exploring the possibility of forming a joint venture to produce multi-functional vehicles. The venture will be a 50/50 split between Volkswagen and JAC.

Axalta Coating Systems has rejected a $9.1b all-cash bid from Japan's Nippon Paint Holdings. The rejection comes after Axalta ended merger talks with Dutch paint maker Akzo Nobel earlier this month. 

FACILITY EXPANSION

Adient broke ground on a prototyping and testing facility in Pune, India. The seating supplier is expanding its existing technical center.

Brose is expanding its New Boston, Michigan facility and adding to its Auburn Hills, Michigan workforce.

Plastic Omnium has expanded its R&D facility in Lyon, France.

PLANT OPENING

SAS Automotive Systems will open a facility within the Mercedes-Benz U.S. International plant in Tuscaloosa, Alabama. The German supplier of cockpit modules will supply the SUVs assembled on-site.

PRODUCTION INCREASE

Sumitomo Chemical is boosting their annual production capacity of resorcinol from 2,000 tons to 12,000 tons in response to increasing demand. Resorcinol is used in the production of automotive tires.

Panasonic has stated that production volumes will increase at Tesla's Gigafactory 1. Automation is expected to increase the number of battery modules manufactured for the delayed Model 3 units.

Asahi Kasei is increasing a planned investment by an additional $268m to boost production of separators for lithium-ion batteries. The move comes in response to the increasing demand for EVs.

RAW MATERIALS

Prices for Aluminum have climbed 25% this year due to China closing illegal smelting to curb pollution. The volatility in the market due to the capacity closures will likely continue to drive up prices.

Germany’s largest industry association, BDI, warned of shortages of raw materials for batteries. Demand for cobalt, graphite, lithium and manganese is growing faster than production capacity.

REGULATION

A new report from the Bank of Montreal suggests that failure to renegotiate NAFTA would mean a 0.2% reduction in real US GDP over the next five years, and a 1% decrease for Canada's economy.

The EU has imposed fines on 5 suppliers of automotive safety equipment for their involvement in a price fixing cartel. The fines total to around 34m euros.

RISK ANALYTICS

A report on cobalt sourcing practices puts automotive companies behind the electronics sector. The sourcing practices reflect criteria based on the UN Guiding Principles on Business and Human Rights and OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

SUPPLY CHAIN

Automotive suppliers are having a hard time booking air cargo space on major long haul intercontinental routes. The seasonal peak in demand has far exceeded traditional levels, resulting in reduced capacity and inflated prices.