Elm Analytics - Automotive Supply Chain Risk Digest #169 - May 1 - 7, 2020

Two new visualizations this week:

CHANGE IN MANAGEMENT

Audi of America has named longtime executive Thiemo Rusch as its new senior VP of sales. Rusch is taking the role over from COO Cian O'Brien, who is moving to Volkswagen Commercial Vehicles in the UK as its new brand director.

EARNING DIP

Sales in Germany dropped by 61% in April due to coronavirus-related government restrictions. All brands lost volume except for Tesla, whose sales grew by 10%.

HUMAN CAPITAL

Yazaki North America is cutting its Mexico workforce by around 20% due to decreased demand as a result of the coronavirus. Reuters calculates that the cuts translate to approximately 14.5k job losses.

Uber is cutting 3.7k jobs and closing 180 driver service centers. The cuts come as a response to decreased demand during the coronavirus outbreak, and the company says more "difficult adjustments" are coming.

MERGERS, VENTURES, ACQUISITIONS

Borgwarner will proceed with its acquisition of Delphi Technologies after resolving an issue with Delphi's recent credit drawdown. The merged company will be owned 85% by Borgwarner and 15% by Delphi.

Continental is postponing the planned spin-off of its powertrain business, Vitesco Technologies.

PLANT CLOSING

Tenneco closed its ride control component plant in Owen Sound, Ontario, Canada, for good late last week. The closure was first announced in 2018 and has resulted in the loss of around 500 jobs since then.

Norsk Hydro will close its Hydro Precision Tubing plant in Remscheid, Germany, by the end of the year. The closing puts 129 jobs at stake.

EV battery maker Clarios will close its plant in Middletown, Delaware, by November of this year. The closure will affect around 200 jobs at the facility.

Cleveland-Cliffs' subsidiary AK Steel is permanently shutting down three production lines at its steel plant in Dearborn, Michigan, putting 343 employees out of work. Cleveland-Cliffs acquired the former Rouge Steel plant from AK Steel less than two months ago.

PLANT OPENING

BMW reopened its SUV factory in Spartanburg, South Carolina, this week at 50% production capacity. The automaker will initially build vehicles with parts stocked from before the shutdown.

Despite being heavily damaged by a tornado last month, Borgwarner's transfer case plant in Seneca, South Carolina, is planning to resume production early this month. The plant makes transfer cases for Ford F-150 and Super Duty pickups, Expedition and Explorer SUVs, and the Lincoln Navigator.

Hyundai and Kia reopened their respective plants in Montgomery, Alabama, and West Point, Georgia, this week. For now, both plants will operate on single shifts as a safety precaution.

PLANT SHUTDOWN

Tesla shut down its Shanghai plant reportedly due to part shortages and manufacturing equipment problems. The company extended the factory worker's Labor Day Break, and they are expected to return as early as May 9th.

Originally expected to reopen this week, Volkswagen has pushed back the production restart date at its plant in Chattanooga, Tennessee. The automaker says that before resuming, they will "...weigh the readiness of the supplier base, as well as market demand and the status of the COVID-19 outbreak".

RAW MATERIALS

The only permitted cobalt refinery in North America expects to produce battery-grade cobalt-sulfate by the end of the year. First Cobalt in Ontario, Canada plans on expanding its production capacity.

REGULATION

Michigan manufacturers will be allowed to reopen on May 11th, one week before the planned restart by GM, Ford, and FCA.

Bipartisan interest, in Washington DC, is growing for an auto industry program to stimulate sales.

RISK ANALYTICS

McKinsey: Coronavirus: Five strategies for industrial and automotive companies