Elm Analytics - Automotive Supply Chain Risk Digest #142 - October 25 - 31, 2019

BANKRUPTCY

Dura Automotive Systems filed for Chapter 11 protection. The move hopes to clear obligations to replay a bond insurer in an unrelated legal dispute. Although Dura is profitable, the filing "...seems to be a creative way of trying to negotiate a deal that probably should be done out of court."

German foundry Ortrander Eisenhütte has begun bankruptcy proceedings. The Ortrand foundry manufactures thin-walled, weight-saving cast iron products for automotive.

CHANGE IN MANAGEMENT

Hyundai Motor Mexico has named Claudia Marquez its new CEO. She was VP of sales at Nissan and held leadership positions at Infinity and BMW Group.

CTO Bob Kruse has left Karma automotive in a restructuring move to cut costs.

Doug Parks was named GM's global product development and purchasing chief. He had managed GM's AV and EV programs.

LABOR DISPUTE

Ending a 40-day strike, the UAW ratified a tentative agreement with GM.

Ford and UAW reached a proposed tentative agreement on a four-year contract.

LITIGATION

The Detroit Free Press has an in-depth investigation of the Ford Focus and Fiesta transmission flaws.

Ford has issued recalls for 294k Expedition (toe link), Edge (seat belt), Transit (driveshaft), Lincoln Navigator (toe link) vehicles.

FCA is recalling around 160k diesel Ram pickups over a coolant leak problem that could cause a fire. The vehicles affected are Ram 1500 models from 2014-2019 primarily in the U.S. and Canada.

MERGERS, VENTURES, ACQUISITIONS

FCA and PSA announced a 50-50 merger to form what would be the 4th largest auto group. The venture would save over $4b each year.

Volkswagen Autonomy, a new business unit, is focused on bringing autonomous cargo vans and taxis to market. The group will be based in Munich and Wolfsburg, German, with subsidiaries in Silicon Valley in the U.S. and in China. The unit will be led by Alexander Hitzinger, who worked on Apple's Project Titan.

Honda affiliated suppliers Keihin, Showa, and Nissin Kogyo will merge with Hitachi Automotive Systems. The new company will manufacture EV drivetrains, electronic control units, and chassis parts to electrical systems, engine components, shock absorbers, brakes, and steering systems. It will become Japan's third-largest automotive supplier.

Tactile Mobility, an Israeli startup, has secured $9m in funding from Porsche, among other investors. The company's software uses a vehicle's non-visual sensors to determine road conditions and vehicle-road dynamics.

PLANT CLOSING

Winona PVD Coatings will close at the end of 2019. The Warsaw, Indiana supplier utilized physical vapor deposition, a process used to create a chrome finish on wheels. The plant employs 108 people.

PLANT DISASTER

OSHA has cited Strahle + Hess for exposing employees to amputation hazards at the company's Auburn, Alabama, facility. An employee suffered a partial finger amputation while attempting to remove material from a lamination machine.

PLANT OPENING

In the wake of Turkey's military operations in Syria, VW has put its plant plans on hold. The plant needs to be operational by Oct 2022 as the Emden, Germany plant to switch to EV production. One solution would shift product to VW's factory in Bratislava, Slovakia.

PLANT SHUTDOWN

Following the ratification of its new labor contract with the UAW, GM resumed normal production operations at plants in Ontario, Canada and Ramos Arizpe and Silao, Mexico.

Subaru has restarted production at its plants in Gunma, Yajima and Izumi, Japan that were affected by Typhoon Hagibis two weeks ago. While the plants suffered no direct damage from the typhoon, suppliers to the plants were affected by widespread flooding that resulted in a parts shortage.

RAW MATERIALS

IHS:

• China's supply dominance of rare earth elements will be a continued concern.

• Commodity prices continue to soften.

REGULATION

GM, Toyota, Hyundai, and FCA are siding with the Trump administration to bar California from setting its own fuel-efficiency requirements.

The Trump administration is discussing specific legislation, related to the USMCA, that would allow it to administer production rules for companies.