Elm Analytics - Automotive Supply Chain Risk Digest #48 - January 5 - 11, 2018

CHANGE IN MANAGEMENT

Continental is in early stages of talks about a structural overhaul.

PSA Group selected Stephen Norman to turnaround UK's Vauxhall. Norman moved from his role as PSA's CMO.

Duncan Movassaghi will replace Ron Stach as senior vice president for U.S. sales at Volkswagen of America.

INDUSTRY DIRECTIONS

CEO Jim Hackett outlined Ford's mobility vision at CES this week. 

LABOR DISPUTE

Thousands of German metal and engineering firm workers are on strike in support of their union's wage claims. The IG Metall union is campaigning for a 6% pay raise for their workers this year in addition to the ability for workers to reduce their weekly hours from 35 to 28 for up to two years with no loss in pay.

Workers at Hyundai in Ulsan, South Korea have been on strike for five days as part of partial strikes they began last week.

LITIGATION

Expanding on the largest recall in automotive history, Takata is recalling yet another 3.3m airbags. The recalls are being phased in over the next 3 years and cover certain 2009, 2010 and 2013 vehicles made by Honda, Toyota, BMW, and more.

Ford and Bosch were accused of rigging emissions devices on diesel pickups. Bosch faces similar accusations in cases against VW, FCA and GM.

MERGERS, VENTURES, ACQUISITIONS

BlackBerry is partnering with Baidu to provide its QNX operating system for Baidu's autonomous platform. 

The Renault-Nissan-Mitsubishi alliance is launching a $1b venture capital fund to be used over the next five years. Alliance Ventures will focus on investments in vehicle electrification, autonomous systems, connectivity and artificial intelligence.

Toyota is joining forces with five other companies including Amazon, Uber, and Pizza Hut to create a new autonomous pod-like vehicle called the e-Palette. Essentially, it will be a blank canvas on wheels that could be used for things such as a rolling sneaker store, mobile pizzeria, and more.

The UK government has struck up a "sector deal" with the automotive industry that will see a $114m ( £85m) investment into new automotive technologies. The investments will happen via three flagship projects led by JLR, GKN, and Ford.

PLANT EXPANSION

China's SAIC began the second phase of construction at its assembly plant in Zhengzhou to expand output at its Roewe and MG brands.

With more than 70 automakers, China's domestic auto sector continues to add plant capacity.

PLANT OPENING

Toyota and Mazda have announced that they will build their new $1.6b JV plant in Alabama. The plant will employ around 4,000 people to make 300,000 vehicles per year and will start production in 2021. 

This 2,500-acre location is over twice as big as targeted leaving lots of room for growth. The new plant will shift production to the south, expected to move Alabama to the #2 position in US output.

Geely's premium brand, Lynk & Co, is eyeing South Carolina for a potential assembly plant. Lynk & Co suppliers would need to provide small-scale, highly variable parts as its vehicles are all built to order.

Trelleborg is building a new plant in Aurora, OH that will consolidate four of their existing sites into one 156,250sf facility. The new plant will consolidate sites from Streetsboro, OH; Bristol, IN; and Aurora. 

PRODUCTION DECREASE

PSA is reducing the Ellesmere Port plant in northwest England to one shift. The plant builds the Opel / Vauxhall Astra.

PRODUCTION INCREASE

In spite of Trump threats, Mexico's auto exports to the US are at an all-time high as they increased 9.4% this year to 2.33m vehicles.

Ford Sollers is increasing production at its Yelabuga plant in Russia. Adding a work day and new jobs will allow Ford to respond to demand for SUVs and vans.

REGULATION

Deloitte on implications of a hard Brexit (pdf): "Trade barriers emerging in the course of Brexit such as tariffs or regulation would considerably harm supply chains and raise the costs for suppliers"

Russian changes in regulations may push for Tier 2 and 3 to be sourced from local suppliers.