Elm Analytics - Automotive Supply Chain Risk Digest #107 - February 22 - 28, 2019

HUMAN CAPITAL

FCA has announced that it will cut nearly 1,400 jobs from its assembly plant in Belvidere, Illinois. A spokeswoman said the cuts are to "better align production with global demand."

Apple is laying off 190 employees from its self-driving car division, Project Titan, across eight facilities near its Cupertino, California headquarters. Public documents filed regarding the layoffs offer a few previously undisclosed clues about what direction the tech giant is taking with the division.

LABOR DISPUTE

The UAW has filed a lawsuit against General Motors over their decision to "unallocate" product from four of its U.S. plants. The union says the move is a breach of its 2015 collective bargaining agreement with the automaker.

LITIGATION

In another blow for Volkswagen relating to their emissions scandal, Germany's Federal Court of Justice has rebuked the automaker's arguments that their cheating software was legal under EU laws. The opinion opens the door for thousands of VW owners in Europe to potentially receive compensation from the automaker.

BMW has been fined $9.65m in Germany for installing improper engine-management software into 7,965 vehicles, leading to higher emissions. The automaker says that it has accepted the findings.

Kia and affiliate Hyundai are expanding their US recall related to engine fire risks by about 534,000 additional vehicles.

MERGERS, VENTURES, ACQUISITIONS

French automaker PSA is planning to re-enter the US market with its Peugeot brand. While PSA hasn't announced an official timeline, Automotive News is reporting that the company has discussed 2026.

Volkswagen is going to invest up to $1.7b in Ford's artificial intelligence unit, Argo AI. $600m would go towards equity, giving VW a 50% stake in the business, while the remaining $1.1b would be working capital for the unit's R&D operations.

BMW and Daimler are planning "long-term strategic cooperation." The partnership is the second between the two recently. The first merging mobility services. The latest in autonomous technologies.

ZF Friedrichshafen confirmed it held takeover talks with Wabco. The strategic discussions focused on autonomous technologies.

PLANT DISASTER

A deadly crash occurred at the Chrysler Jefferson North Assembly Plant in Detroit. Witnesses say a plant employee entered the parking lot at a high rate of speed. The vehicle crashed into a pole and burst into flames.

Firefighters extinguished a fire at the General Motors Manufacturing Plant in Spring Hill, Tennessee. Contractors were removing two injection molding machines in an unoccupied area of the plant. 

A massive fire broke out at a storage facility just outside plastic parts supplier US Farathane's facility in Auburn Hills, Michigan this week. The company says they anticipate "minimal disruptions" to customer shipment schedules.

PLANT EXPANSION

Guyoung Tech, USA will add a new welding line in its production facility in Evergreen, Alabama. Its nearby Castleberry facility will send parts through Evergreen before delivery to Hyundai and Kia.

PLANT OPENING

FCA is planning to build a new assembly plant in Detroit, Michigan and will also invest $4.5b into five of its existing Michigan plants. The projects would create nearly 6,500 new jobs.

Inteva subsidiary US Roof LLC is planning to invest $13.9m into a new facility in Michigan. The supplier is looking to lease a 70-100k sq ft facility to house a tech center, office space, lab production, and warehousing.

Hella has opened a new production facility in Mehsana, India. The 54k sq ft electronics plant will produce accelerator pedal sensors.

South Korean EV battery maker SK Innovation is investing $853m into building a second battery plant in Komarom, Hungary. The supplier began construction of its first battery plant in Komarom less than a year ago.

REGULATION

Buried in recent legislation that averted a second government shutdown is a provision for the US Trade Representative's office to establish an exclusion process for the latest batch of Chinese goods hit with import tariffs. The USTR must report on the process' implementation and timing by March 17.

The Center for Automotive Research warns the Export Control Reform Act could limit exports of specific automotive technology. If interpreted broadly, it could impact automotive operations and trade with China.

To protect itself from Brexit, Aston Martin has increased its parts localization in the UK to more than 55%. The increased localization rate places the automaker above the WTO's threshold for a vehicle to qualify as local in origin.

SUPPLY CHAIN

Volkswagen is making a "significant" investment into a new port processing facility in Baltimore, Maryland. The new auto terminal will be able to handle import processing for 120k VW, Audi, Bentley, and Lamborghini vehicles per year.