Elm Analytics - Supply Chain Risk Digest #20 - June 24 - 30, 2017

BANKRUPTCY

Takata has filed for bankruptcy protection in Japan and the US. Key Safety Systems will buy "substantially all" of Takata's global assets and operations for $1.59b. 

EARNING DIP

Germany's Schaeffler warned that Q2 earnings would fall. The company cited higher steel costs and the expensive shift to electric vehicles.

INDUSTRY DIRECTIONS

Suppliers are racing to create simpler electronic systems, as the number of digital parts increases. The current mess of complexity may reduce the number of suppliers chosen by OEMs.

Cars.com has changed the metrics it uses to rank the "Most American" cars after only 3 models qualified this year. They will now only require 60% of a car's parts to be produced domestically for it to be considered in the ranking, down from 75%.

PSA plans to introduce Level 3 "hands off" self-driving cars in 2020. Level 3 allows autonomous driving but requires the driver to take back control at any time. Other automakers, such as Ford and Volvo, have said they will not offer Level 3 vehicles.

A living room on wheels? Design students at ArtCenter in Los Angeles teamed up with the auto industry to envision the future of mobility.

LITIGATION

German prosecutors have launched a preliminary probe against employees at Porsche AG. Some Porsche models have 3 liter diesel engines supplied by Audi. Stuttgart prosecutor's office is also formally investigating three employees at automotive supplier Bosch.

MERGERS, VENTURES, ACQUISITIONS

A long-term supply agreement between WABCO and Daimler has been extended. WABCO will be developing new heavy-duty automated manual transmission control technology for the automaker.

PLANT EXPANSION

France's Valeo is expanding its existing facility in Smyrna, Tennessee over the next five years. The Nissan supplier produces front-end modules, active grill shutters, and HVAC components. The expansion will add 130,000sf.

Yazaki Corp, has completed its two-year expansion of the Circuit Controls Corp. plant in Petoskey, Michigan. The plant produces electrical component terminals.

PLANT OPENING

Mexico's Goss Global SA de SV will move its global headquarters to London, Ontario. The thermoset composite manufacturer will also open a manufacturing and R&D center. The facilities are expected to better serve the US market.

Lear has entered into a development agreement with the City of Flint, Michigan. Lear is interested in the former Buick Headquarters site.

Germany's IFA is building a new facility outside of Charleston, South Carolina. The plant, slated to open in 2018, will manufacture propshafts for nearby Volvo and BMW.

Injection molder Adkev will open a new facility in Danville, Kentucky. The site, at the former Caterpillar Inc. plant, will produce HVAC, electronic and trim components at the 190,000sf facility. Operations are expected to launch in mid-2019.

REGULATION

Mexican auto suppliers have been working on strategies in preparation for NAFTA talks.

Testifying at a public hearing in Washington this week, Matt Blunt, president of the American Automotive Policy Council stated that tightening NAFTA rules of origin "...could make us less competitive as compared to our international peers and affect our ability to export." 

Auto industry reps made a push in Washington this week for greater federal oversight and authority to regulate self-driving cars. The industry argues that more consistent federal regulation is needed to spur innovation and prevent a confusing patchwork of state laws from impeding progress. 

SUPPLY CHAIN

As OEMs pursue new technologies, some suppliers are picking up a growing list of tasks that used to be in-house work at automakers, such as engine part machining, heat treating and powertrain module subassembly. One of these companies is American Axle who has been picking up incremental content in transmissions as those systems grow increasingly more complex.