Coronavirus in the World’s Factory

Shutdowns in China are causing disruptions in the automotive manufacturing sector.

COVID-19, commonly known as the Wuhan coronavirus, continues to dominate the news cycle as the number of cases in Wuhan, China and in several countries across the globe continues to rise. Wuhan, like many cities in China, is a manufacturing powerhouse. As the Coronavirus continues to impact the lives and livelihoods of citizens of those affected, it also has rippling effects in the supply chains and factories of many industries, including electronics, steel production and especially automotive: Wuhan is home to major production facilities for Kia, Nissan, Honda and Peugeot, as well as Chinese carmakers such as Dongfeng. Honda makes about 700,000 cars a year in the city and Nissan produces about 1.5 million. 

Since it was first detected in January, confirmed cases of Wuhan Coronavirus have climbed to over forty thousand as of this writing, and claimed over nine hundred lives, more than the total lives lost in the 2003 SARS epidemic. The World Health Organization has warned that cases are expected to rise further and has declared the outbreak a global emergency. In addition to Wuhan, many other major Chinese manufacturing areas such as Shanghai, Shenzhen, and Beijing are affected.

According to a report by NBC News, China is predicted to suffer a loss in production of one million vehicles as a result of shutdowns related to the outbreak. Research company Gasgoo Auto Research Institute said Sunday that the sale of passenger cars in 2020 would fall by 3% to 6% from the previous year due to coronavirus.

Factory shutdowns in China are causing supply chain issues across the globe.

Hyundai has delayed the launch of its facelifted Genesis G80 as a result of the outbreak.  In a statement, Hyundai confirmed that it had “decided to suspend its production lines from operating at its plants in Korea,” adding that “the decision is due to disruptions in the supply of parts resulting from the coronavirus outbreak in China.” The delays are specifically caused by a shortage of wiring harnesses from suppliers Kyungshin and Yura Corporation. The company declared in early February that it would idle all seven of its plants in South Korea because of a lack of parts from suppliers in China.

Honda Motor-affiliated parts manufacturer F-Tech has decided to produce brake pedals in the Philippines instead of at its Wuhan plant.

Fiat Chrysler on Thursday confirmed the coronavirus may force it to temporarily suspend production at one of its many plants in Europe.

Suzuki said it may start sourcing parts from outside China over concerns that the outbreak could disrupt production in India, its biggest market.

Nissan and PSA, which makes the Peugeot and Citroen brands, have said their factories will remain closed until Friday, February 14th.

VW, BMW, Toyota and Honda have all said they now plan to restart Chinese production the following week.

“We certainly are very concerned about the situation on an overall basis,” GM China President Matt Tsien said. GM operates 15 assembly plants in the county with its Chinese partners. That compares to Ford with six assembly plants and Fiat Chrysler at two. The automakers also operate smaller supporting facilities.

Aside from the automotive industry, Foxconn has yet to reopen its largest Chinese factory. Shenzhen’s Longhua district, where the plant is located, has said production would restart as soon as officials have completed inspections at the facility.

“Our teams in each of our facilities in China are working closely with the respective local government agencies and we are continuing to do that as we implement our post-holiday production schedules,” said a spokesman for the company.

Last week as Foxconn was pushing for permission to restart operations it said that hundreds of thousands of workers at its factories would wear surgical masks to prevent infection and undergo regular temperature checks.

Aside from manufacturing business, the outbreak’s impact on human life and wellbeing should be noted. But this outbreak shows how the global manufacturing supply chain is a highly complex system. To weather the storm, manufacturers across the planet will need to respond with flexibility.