Elm Analytics - Automotive Supply Chain Risk Digest #285 - July 22 - 28, 2022
CHANGE IN MANAGEMENT
VW CEO Dr. Herbert Diess abruptly announced he will step down on September 1. Porsche CEO Oliver Blume will take over as chairman of the management group. Sources believe that in-house software division issues lead to Diess' departure.
Lamborghini veteran, Luigi Taraborrelli, is joining Apple. Project Titan has experienced more than its fair share of talent turnover in the past year.
DISASTER
This week, two employees were transported to a hospital from the Ultium Cells Battery plant in Lordstown. Several incidents were filed with OSHA in July.
Three workers were hospitalized for injuries from an explosion at TimkenSteel's Faircrest plant in Ohio. A fire started in the melt shop area involving a furnace.
EARNING DIP
GM reported a 40% decrease in net income for Q2 of 2022 compared to Q2 of 2021.
EXPANDING
Headlight maker ZKW Group is adding nearly 168k sf of production space to its plant in Silao, Mexico. The expansion will create over 800 new jobs.
INDUSTRY DIRECTIONS
➡️ Automotive News: The auto industry is craving greater supply chain visibility
A new survey from AAA suggests that 25% of US consumers plan to purchase an EV as their next vehicle.
LABOR DISPUTE
In 2023, GM, Ford, and Stellantis will negotiate a four-year UAW contract in a new environment of competing wages and inflation. In the meantime, the union is undergoing organizational changes centered around past corruption issues.
LITIGATION
Hyundai supplier SMART Alabama has been accused of using child labor at its plant in Luverne, Alabama. A report from Reuters cites area police, former and current SMART employees, and the family of three children alleged to have worked in the plant.
MERGERS, VENTURES, ACQUISITIONS
GM has inked a deal for LG Chem to supply them without over 950k tons of cathode active material for EV batteries through 2030. The two will also explore the possibility of CAM production in North America by 2025.
OPENING
Auto electronics maker Gentex is investing $300M to expand its facilities in Zeeland, Michigan. The plans include building a new plant and distribution center while expanding its existing plant.
LG Energy Solution is looking for new battery production sites in Europe and Asia rather than in China due to rising material costs and COVID-19 lockdowns. In Q2 2022, LGES announced plans to build a plant in Arizona to supply Tesla and Lucid; however, those plans are being reassessed.
PRODUCTION INCREASE
Toyota is increasing production in Asia, Europe, and Latin America to help offset production constraints in Japan and North America. Those markets produce premium vehicles saddled by semiconductor shortages.
RAW MATERIALS
Yanfeng Automotive Interiors saved over $10M over the past two years due to a new type of reusable cardboard shipping carton.
REGULATION
The US House and Senate voted to pass the $280B CHIPS and Science Act aimed to increase domestic chip production this week. The bill will now go to President Biden's desk for final approval.
An unexpected deal between senators Schumer and Manchin moves to extend existing EV tax credits.
Georgia is giving Hyundai $1.8B in tax breaks and incentives for building its first US EV plant near Savannah. The deal calls for the automaker to invest $5.5B into the site and hire 8.1k workers.
RISK ANALYTICS
A cyberattack on Eberspacher earlier this year reportedly cost the company somewhere in the range of $40-60M. Despite happening almost nine months ago, the exhaust tech supplier is just now eliminating the remaining effects of the ransomware from its systems.
SUPPLY CHAIN
Ports are under stress again:
Port of Savannah (high retail demand, expansion construction)
Port of Oakland (recovery from trucking blockade)
Port of Wuhan (COVID-19 lockdowns)
IHS Markit:
Rivian is pushing consumer customization choices into the future due to supply chain disruptions.