As one of China’s ‘Detroits’ reopens, world’s automakers worry about disruptions
BEIJING: Automakers across the world face the possibility of extended supply chain disruptions as factories in China stutter back to life after closures due to the coronavirus outbreak.
The car industry is especially exposed as Wuhan – the epicenter of the outbreak – is known as one of China’s ‘Detroits’, accounting for nearly 10% of vehicles made in the country and home to hundreds of parts suppliers.
Non-essential factories in Wuhan and other cities in Hubei province remain on lockdown at least until Wednesday. When they reopen on March 11, or whenever authorities give the go-ahead, it is not clear if companies will have the raw materials or workers to get back to normal operations.
Automakers are concerned about their employees’ health and the uneven and unpredictable application of rules in different cities and regions that is making it hard for an industry that is used to uniformity to plan ahead.
“In some cities, one worker gets infected, the whole factory where he works needs to be shut down,” said one official at Honda Motor Co, which has a manufacturing hub and more than 100 suppliers in Wuhan and the surrounding area.
“In Wuhan, that has not been clarified,” he said. “You don’t know what’s going to happen to your factory until you report an infection case to authorities. It’s hard to live with that kind of uncertainty when you’re running a massive factory.”
Employees reported back to work at Honda’s other Chinese manufacturing hub, in the southern China city of Guangzhou, on Feb. 10 and partial production restarted on Feb. 17. Production there is still running well below capacity due to parts shortages and logistical delays, the company official said.
Honda is expecting to reopen its Wuhan hub this week, after the lockdown is lifted or whenever authorities allow it. Together, Honda’s two China hubs have the capacity to produce 1.2 million vehicles a year, or more than 20% of the company’s total global production.
Like other manufacturers in Wuhan, automakers and parts suppliers are still dealing with partially blocked roads and health inspections on major transportation arteries, which are creating problems moving around raw materials and finished parts, according to Yohei Shinoda, personnel manager for Kasai Kogyo Co, a Japanese company with four plants in China producing interior door and roof trims for Honda and other automakers. – Reuters