Executives at several carmakers and motor parts suppliers warned that plants in Europe and the US were only weeks away from being forced to close as disruptions caused by the coronavirus outbreak in China rippled through the global manufacturing supply chains. The warning came as Hyundai said on Tuesday that it had to shut down all its car factories in South Korea after running out of components from China. The world’s fifth-biggest carmaker by sales said it was searching for new sources of engine wire-harness after problems in the supplies of the core electric componentry from China.
“There is a concerted effort to mitigate it before it really bites,” said a senior director at one global car group, adding that its plants had three to four weeks to remove Chinese parts from their supply lines or risk halting production as well. Carmakers are reliant on a global network of suppliers, with parts originating in China often passing through companies in several countries before being placed into vehicles at factories in Europe or the US. The pressure is building on supply companies to maintain output and protect staff, with parts makers Continental and Thyssenkrupp both holding crisis meetings earlier this week.
“We are working closely with our suppliers and customers to minimize any disruptions,” said Continental, which runs 50 sites in China, and makes key parts for most major European carmakers. The disruptions show how coronavirus is wreaking havoc in supply chains across sectors, notably in the vital tech sector, as travel restrictions prevent the normal resumption of work after the lunar new year in Wuhan, central China, where the outbreak originated, and elsewhere in the country.
Many companies have said they expect to resume production in China next week in accordance with guidelines from authorities, but the plan could be reviewed if the coronavirus, which has infected 20,689 and killed 427, continues to spread. Analysts expect the impact on car sales and parts procurement in China from the coronavirus outbreak to be bigger than during the Sars outbreak in 2003 because the world’s second-largest economy has become a much bigger manufacturing hub for the motor industry, including electronic parts.