When an avalanche happens, no snowflake escapes the dump.
When an epidemic breaks out, no car company is safe.
The key is: how to "save yourself".
Globalization of the epidemic? The impact on the automotive supply chain continues to intensify
Photo: Baidu
According to the latest statistics show that, as of 7:00 Beijing time on the 17th, the global cumulative number of confirmed cases of new coronary artery pneumonia reached 173,344 cases, deaths of 7,019 cases, has been reported to the case of the countries and regions up to 152 cases, outside of China, the new coronary artery pneumonia diagnosed 92,222,828 cases, Italy, Spain, Iran, Germany, the United States and other places are the hardest hit.
With the globalization of the CIP epidemic intensifying, its impact on the automotive supply chain continues to expand.
According to the latest news, in addition to China, where the outbreak of the disease began, a number of countries such as South Korea, Japan, Italy, Iran, India, the United States, Mexico, Brazil and other countries have also experienced serious outbreaks, which has led to a shortage of labor for automakers, forced production stoppages, disruptions in the supply chain, and sluggish sales in the auto market that existed only in some areas in the early days of the disease, which is now globalized.
South Korea, for example, has announced a gradual suspension of production at its plants since early February, led by Hyundai, followed by Kia, Ssangyong and Renault, which also joined the shutdowns to cope with supply disruptions caused by the outbreak of the new coronavirus.
As a result of this impact, in February this year, South Korea's total automobile production fell 26.4% year-on-year, only 1,892,350,000 units; South Korea's domestic automobile sales fell 18.8% to 978,970,000 units; exports in February compared to the same period of 2019 fell 16.6% to only 2.4 billion U.S. dollars, the downward trend is obvious. Among them, Hyundai's exports in February fell 21.4 percent year-on-year, and Kia's overseas shipments fell 30.1 percent compared with the same period in 2019.
Photo credit: Nissan
Japan With the exception of Suzuki, which has been relatively unaffected by the outbreak - as the brand has very little car manufacturing and sales operations in China - the entire vehicle production and sales of several other mainstream Japanese car brands have been hit hard by the outbreak. According to Goldman Sachs' forecast, the impact of the new Crown Pneumonia outbreak on vehicle production and demand will reduce the profits of the five major Japanese automakers - Toyota, Nissan, Honda, Mitsubishi, and Mazda - by ￥170 billion (US$1.6 billion), and their total production capacity by 580,000 units from January to April, with Toyota's capacity utilization expected to be 94%, Nissan's 47%, and Honda's capacity utilization rate of just 16 percent.
European market, in view of Italy has become in addition to China, by the new crown pneumonia epidemic, the most serious countries, recently Europe's major automobile and parts makers have been closed in Italy's factories, cut production, and consider letting the employees go home. For example, Volkswagen, due to the new crown pneumonia epidemic caused by supply disruptions, its plant in the Navarra region of Spain has reached an agreement with the main local trade unions, so that part of the staff to go home to rest, and according to the agreement between the two sides, Volkswagen can be carried out in 2020 a certain amount of short-term layoffs. Peugeot Citroen (PSA), for its part, has decided to close 15 of its plants in Europe until March 27, and FCA has decided to shutter more European plants, most of them until March 27, because of the worsening outbreak.
While some of the U.S.-based automakers such as GM, FCA, Toyota and Tesla have not been affected by the outbreak so far, they are also known to have been scrambling for weeks to get the parts they need for their manufacturing operations in North America and elsewhere as the number of diagnoses in the country grows and parts supply shortages occur.
In addition, Mexico, Brazil, India and other countries, the current outbreak may bring serious consequences for the automotive industry, has also issued a warning. Among them, local officials in Mexico have said that some of the country's auto factories may have to shut down production in the coming weeks as the new coronavirus outbreak affects shipments of key components imported from China. Brazilian automakers association Anfavea warned that due to the lack of parts from China, the country's automakers may have to stop production in April. In India, companies such as Tata Motors, Mahindra, TVS?Motor and Hero?MotoCorp have now also said they will face supply chain disruptions due to the outbreak, with Tata Motors having asked office staff at its headquarters and regional offices to work from home since March 16 local time, and a number of others having already announced production suspensions.
Supply disruption crisis? How automakers and parts companies are coping
Whether anyone wants to admit it or not, the new Crown pneumonia outbreak has grown into a global disaster.
Perhaps the situation in China has been gradually improving, with more and more automakers and parts companies resuming orderly production, but that doesn't mean we can rest on our laurels. As we all know, there are about 2~30,000 parts in a car, and any one of them may not be able to build a car if there is any abnormality in the supply of parts. To ensure the normal supply of so many parts, relying solely on a single market is unrealistic, for example, some of the key domestic auto parts, many still rely on imports, and some of the cars produced in other countries, the parts may also come from China, the customs export data can prove this.
According to China's customs statistics, affected by the trade friction between China and the United States and the U.S. sanctions against Iran, the global economic downturn, China's import and export of automobiles and their key parts and spare parts amounted to 151.53 billion U.S. dollars in 2019, a year-on-year decline of 5.9%. Among them, the export value is 67.96 billion U.S. dollars, a year-on-year decline of 2.9%; the import value is 83.57 billion U.S. dollars, a year-on-year decline of 8.3%.
Subregionally, China's top 10 major exporters of automobiles and their key parts and components in 2019 are: the United States 14.28 billion U.S. dollars, a year-on-year decline of 22.6%; Japan 4.55 billion U.S. dollars, a year-on-year decline of 13.1%; Mexico 3.85 billion U.S. dollars, a year-on-year increase of 8.2%; Germany 2.64 billion U.S. dollars, a year-on-year decline of 4.8%; the Russian Federation US$2.46 billion, up 14.6%; South Korea US$2.2 billion, up 21.3%; UK US$1.55 billion, up 3.6%; Brazil US$1.48 billion, up 9.6%; Thailand US$1.47 billion, down 5.2%; and Canada US$1.37 billion, up 3%.
This means that any anomaly in the functioning of any of the world's major automotive manufacturing and consumer markets, including China, could affect the normal operation of the global supply chain. Because of this, in order to ensure the normal supply of parts and components, there are already companies actively carry out all kinds of self-help measures, including air transportation of parts and components, replacement of suppliers, transfer of production capacity and so on.
●? In the parts transportation mode "do article", such as air transport, the opening of the transport train
In order to better carry out the production, shorten the parts logistics time, in the selection of suppliers, many car companies often ask the latter to build factories in their neighborhood, or suppliers take the initiative to cooperate with the vehicle factory, the factory will be built near the car company. However, due to the outbreak of the new Crown Pneumonia epidemic, resulting in the production of many parts and components suppliers worldwide, logistics and transportation have been affected, OEMs have been unable to bother about the location of the supplier, at this moment for them to ensure that parts and components continue to supply is the most important. To this end, many car companies have begun to air transport parts to ensure the normal operation of the production line.
Jaguar Land Rover, for example, has been flying parts from China to its UK factories as early as February to maintain production. Subsequently, SAIC Anji Logistics also began to use chartered flights to provide emergency parts for two multinational automakers in North America, Ford and General Motors.
On February 25, a China Eastern Airlines CK287 cargo flight carrying 94 tons of Ford's chartered parts departed from Pudong Airport and arrived in Bangkok, Thailand, at 5 p.m. on the same day to ensure the supply of parts for Ford's production base in Thailand. On the same day, a cargo flight of China Eastern Airlines was loaded with parts required by General Motors - the flight *** carried 422 pieces of automotive parts with a total weight of 80.45 tons, departed from Pudong Airport and arrived in Chicago in the early morning hours of February 26 to ensure a smooth supply chain for GM's manufacturing bases in North America, Brazil and Argentina. It is reported that in order to ensure the supply of parts, GM General **** enabled 16 chartered aircraft.
Entering March, as more and more countries began to outbreak of the epidemic, resulting in a wide range of transportation blocked, car companies and parts companies shut down, more companies joined the air parts camp. For example, Luciana?Herrmann, director of public relations for Nissan Mexico, said that despite rising costs, the company has begun shipping parts to its Mexican factories by plane rather than by ship in order to avoid production problems.
Photo: Mazda
A Mazda supplier has gone so far as to increase production of parts from its Mexican plant by 50 percent in order to solve production shortages in China for parts used in the exterior trim of the Mazda3 and CX-30 models, which are flown to Mazda's assembly lines in Japan. It is reported that Mazda's total **** spent more than 5 million dollars on this move, although the logistics cost is high, but if you do not want to stop production, it can only be so.
Additionally, Guangzhou Automobile also recently proposed that it will partner to mobilize global resources to airlift parts for joint ventures in China. Even some companies in India have decided to use smaller and more expensive air freight to transport auto parts.
Similarly, there is the opening of the special train transportation. early March, a special train loaded with 9200 car seat frame skeleton and 9520 seat back frame skeleton, from Wuhan station, running more than 2100 kilometers, on March 9 to Jilin. It is reported that this batch of materials is FAW Car Co., Ltd. resumption of production of the first batch of auto parts urgently needed to ensure the orderly resumption of FAW Group, the Jilin Provincial Department of Transportation to the Ministry of Transportation and Logistics Protection Office of the transportation security needs, after receiving the demand, the Ministry of Transportation and Logistics Protection Office of the Ministry of Transportation and Logistics Protection Office issued No. 49 emergency transport task instructions to coordinate with the State Railway Group to undertake emergency transport tasks.
In the view of the relevant person in charge of MAHLE, to ensure the continuous supply of parts and components is the responsibility of suppliers in the automotive industry, in this epidemic, the enterprises to take to increase the frequency of shipments, sea freight to air freight, hand-carrying and other measures to ensure the supply of the last resort, for the large-scale supplier enterprises, multi-point layout, in advance of the double certification is the way to avoid the risk. Not only that the person in charge pointed out that in the construction of the supply chain system, the supplier's distribution should be a comprehensive consideration of all aspects of the factors, the core components and materials to be distributed in different countries and regions, the designated suppliers to be a comprehensive consideration of the supplier's business, quality, delivery, technology and risk factors, so that we can form a good supply system to ensure that the global production and supply.
●? Replacement of suppliers
This is also a method that many car companies are now more likely to think of. For example, Geely in order to ensure the smooth resumption of Chunxiao base production, on some of the suppliers outside the city of Ningbo for the replacement. early February Geely officially resumed work, but due to the logistics and transportation between various places at this time was hindered, resulting in Geely suppliers outside the city of Ningbo can not be delivered to the city of the parts of each Geely production base in a timely manner, in addition to the many suppliers outside of the resumption of work time is also much later than the Geely, the Ningbo Municipal Bureau of Economic and Information Technology Before and after **** sorted out 350 local parts supporting enterprise directory for Geely to select, it is reported that the final Geely chose 35.
Photo: Toyota
Toyota relied on its global supply chain to find a replacement factory for one of the company's Wuhan-based parts suppliers, which had been slow to return to work, in just three days. fca, the first European automaker to shut down production due to the pneumonia outbreak, began looking for a replacement supplier a half-month ago. Indian automakers, too, are trying to find alternative suppliers for their parts.
However, as OEMs change suppliers, they often need to carry out a lot of experiments, adjustments and certification of new products to pass regulatory tests and reach a stable production scale, and the whole process takes up to several months, or even longer, and it's almost impossible to replace them if they're an industry monopoly with core technologies. Therefore, not everyone is optimistic about this approach, especially because of the epidemic like this temporary change of suppliers, in fact, also faces a lot of uncertainty.
"In the case of an epidemic outbreak, the development of alternative suppliers is one way, but its effectiveness depends on the complexity of the verification, for example, MAHLE's products and engine performance is directly related to the long cycle of verification, high technical requirements, the switch is unlikely." The above interviewee said.
It is worth mentioning that the dual-supplier model in the automotive industry has actually been around for a long time, and in the early days, in order to control prices and save money, some car companies chose to supply multiple parts suppliers at the same time. Although this model will be controversial because of the improper use of some enterprises, but in fact, for the realization of the stable supply of parts and components is very beneficial, such as the current situation. From this point of view, after this epidemic, do not rule out that more car companies and parts companies will adopt this model.
●? Transfer of production capacity
In this epidemic, the number of companies that have taken such measures to cope with the crisis of supply shortage is also not few. For example, F-TECH, which supplies brake pedals for Honda's CR-V, announced as early as the end of January that it was moving production capacity from its Wuhan plant to one in the Philippines, and said it might move more capacity if the epidemic spreads. South Korea's Hyundai wiring harness supplier Yujin Denso, also began to transfer part of the production capacity to foreign countries, another wiring harness supplier Jingxin Group is trying to increase its production capacity in the United States, India, Cambodia and South Korea's mainland to make up for its decline in China's production capacity brought about by the impact. There's also automotive electronics firm Rohm Semiconductor, which has said it will replace production in Southeast Asian countries such as Thailand.
Photo credit: Rohm
Because of this, there are also many people who are now speculating whether the outbreak will allow the automotive supply chain to move abroad. In this regard, Gaijin Automotive recently launched a survey, the results show that among the 1,334 participants, only 13% of the participants believe that the globalization of the epidemic will accelerate the transfer of the automotive supply chain to Southeast Asia, Africa and other regions, while more participants insisted that China's position in the global supply chain is untouchable and that the automotive industry chain will accelerate to China to converge.
This is not unreasonable. Although compared with Southeast Asia, Africa and other markets, China no longer has a cost advantage, but in the vehicle manufacturing and consumption, the global automotive industry relies on the Chinese market is incomparable to other markets, because of this in recent years, a large number of multinational parts and components companies have chosen to invest in China to set up factories, and part of them even began to R & D and test centers are also located in China as a foothold in Asia and even radiate the global strategic focus. The global strategy focuses on.
What's more, the transfer of the automotive supply chain is not only dependent on the high and low labor costs, but also with the infrastructure support, operating costs, supporting systems, transportation conditions, manufacturing culture, etc. There is a greater correlation between these conditions in the country are now very complete. In particular, the completeness of China's automobile manufacturing industry, according to the data released in 2018 by the China Auto Parts Industry Development Study, there are more than 100,000 Chinese parts and components enterprises, and 55,000 are included in the statistics, basically realizing the coverage of 1,500 kinds of parts and components. Even in the more cutting-edge technology areas such as autonomous driving, China's automotive industry chain has a certain degree of completeness.
Moreover, the pneumonia epidemic has spread to the world, the affected is not only China, from this point of view, the current transfer of production capacity to other countries is not particularly large operational space.
Gai Shi summary: Many people say that the new crown pneumonia epidemic is a human nature of the demon-spotting mirror, is good or bad, a light will know. But in fact, for enterprises, there is a similar effect, through this epidemic, can let more enterprises to find their own shortcomings. For example, in building a robust supply chain system, whether or not there is this epidemic, for car companies and parts companies are very important, but previously many companies may not have done in place, experienced the epidemic, especially witnessed many companies are y involved in the crisis of supply cuts, I believe that many companies in this area will be actively improved in the longer term future to avoid falling into a similar dilemma again.
This article comes from the author of the automobile home car family, does not represent the views of the automobile home position.