Wuhan'S Parts And Components Break Into The Global Auto Industry: Local Smes Hope That The Host Plant Will Not Abandon It.

Since February 10th, domestic car manufacturers have been resumed at different times. However, some owners of the motor vehicle plant told reporters that at this stage, it is mainly to restore some of the workshops, and the scale of the vehicle will still take a while to recover.

The main reason is that the supply of some parts is insufficient. The production of a car requires tens of thousands of spare parts, and one of them is missing.

Affected by the outbreak of new coronavirus pneumonia, the automotive industry is facing a huge impact. On the one hand, the parts enterprises in Hubei can not resume work, resulting in some car enterprises unable to return to work in time. On the other hand, the impact of the epidemic on circulation is impeding the trans provincial, municipal transportation and export of parts. The global auto industry has been affected by the epidemic situation of "Chinese factories".

Hubei and Wuhan are the most influential. In February 20th, Hubei's new coronavirus infection prevention and control command issued a notice, and all kinds of enterprises in the province resumed their work not earlier than 24 o'clock in March 10th.

In twenty-first Century, the economic news reporter interviewed Tian Tian and found that there were more than 1200 auto parts manufacturing enterprises in Wuhan. Among them, it includes BOSCH, Valeo, Visteon and other multinational parts giant set up factories in Wuhan, including Dongfeng Department of the company's supporting supply enterprises, and hundreds of large and small production safety belts, car air conditioning systems, sunroof, bolts, fuel tank valves and other small and medium-sized enterprises.

Auto parts R & D and verification cycle is long, parts giant and host plant cooperate closely, and master core technology, facing the main adjustment of production capacity. And some local small and medium enterprises are facing the huge problem of life and death.

Impact on the world

The new coronavirus epidemic situation has made the world's importance to China's auto industry and the degree of intimeness of the world's automobile industry. It has a clearer and more striking understanding and understanding. The interruption of supply made in China has damaged the global supply chain, and because of the longer supply chain, it still takes a long time to recover.

The reporter searched through the sky and found that 140 of the more than 1200 parts enterprises in Wuhan were foreign investment institutions or branches of foreign investment institutions. Among them, the largest number of Japanese companies. This is mainly because Wuhan is the base of Dongfeng Group, while Dongfeng owns Dongfeng Honda and Dongfeng Nissan, which are joint ventures with Japanese car companies.

"From the industry rules of parts and components, under normal circumstances, large parts and components will choose near production. And some small and sophisticated core components will carry out global sourcing. In January 23rd, a senior member of a multinational component company in China told reporters on twenty-first Century economic report.

In twenty-first Century, the business reporter learned that apart from supplying spare parts to the main engine factories in China, parts of Wuhan's enterprises are also responsible for export business. Among them, Japan and Korea are closer to China than Japan.

In fact, thanks to the low cost of raw materials, labor and logistics in China, car companies in Japan and Korea buy a large number of different automotive components in China. Many auto parts are purchased by joint venture companies, and are also supplied to vehicles that are produced worldwide.

"At present, the domestic automobile market is not good, sales are falling more, and the demand for parts car enterprises in the host plant, especially the autonomous car companies, is smaller. At present, the impact of automobile production in Japan and Korea is relatively large. The impact of the US and Europe may be reflected later. " The above parts enterprise executives said.

Because the epidemic center Hubei is the location of Dongfeng Motor, a partner of Nissan, and Nissan has purchased more than 800 components from the Hubei plant from the brake hose to the air conditioner controller, making Nissan more vulnerable than most other car manufacturers.

Nissan said the delay in production was due to the Hubei provincial government's directive calling for enterprises to stop operations before March 10th. In Japan, Nissan closed some production lines in Kyushu, southwest Japan in February 14th and 17th.

In the face of the spread of the epidemic, the Japanese automobile industry and the government are setting up a joint committee for car manufacturers and suppliers. At present, it is cooperating with the Japan Automobile Manufacturers Association and the Japan Automobile Parts Industry Association. The Ministry of economic and industrial development said in a statement on February 20th that the agency will monitor developments and coordinate communication, and cooperate with the Japanese government to take measures to ensure that components flow smoothly through the supply chain. If the situation worsens, the agency will share information and provide necessary financing and policy support.

Korean car companies also suffered heavy losses in the outbreak. As the wiring harness used to connect complex electronic products has been exhausted, Hyundai Motor closed the production system of an annual output of 1 million 400 thousand cars consisting of 5 factories in Ulsan Industrial Park, Korea, in February 7th.

In addition, in February 6th, Fiat Co also said that due to the impact of the epidemic, parts production was difficult, resulting in the assembly line in Europe likely to be shut down in early March.

At present, the recovery and supply of spare parts in Wuhan still need a long time, and the production of parts suppliers in other parts of the country is also facing difficulties. On the one hand, due to the lack of material supply for upstream suppliers, most spare parts enterprises have insufficient material reserves. On the other hand, due to the logistics problem, the transportation of spare parts to the port requires breakthroughs.

However, some industry members told reporters that, because parts and components from R & D to validation cycle is very long, although most of the car companies will target some parts, choose two to three different parts suppliers. However, for some core components, multinational component companies have strong irreplaceable nature. Local component companies are worried about losing some of their global orders.

Anxiety of local small and medium parts suppliers

In the thousands of auto parts cars in Wuhan, besides the parts and components and subsidiary companies of the main engine factory, more companies belong to small and medium-sized enterprises. Their registered capital is not large, and their scale is not large. There are only a few employees, many of them are two or three suppliers of first-class suppliers. The new crown disease has brought huge pressure to these small and medium-sized enterprises.

"I have stopped work for nearly a month now, and I saw at least three million and a half million of the economic losses I saw, because wages are still being paid and the rent is still being paid. The wages of light workers are nearly three hundred thousand, and the cost of rent and market maintenance. In February 24th, he manager, a component company of seat belt accessories in Wuhan, told reporters.

A component supplier of fuel tank valves in Wuhan is also facing enormous economic pressure. The company's chief executive, Ms. Wang, told reporters that he hoped that the host plant could help Wuhan's parts suppliers ease the pressure at this time.

"We can not produce from February to now, and the production in March will also be affected. But twenty or thirty of the company has to raise and pay wages. Where does the wages come from? There are also two tier and three tier suppliers, and the supplier's money should be paid. This is a chain reaction. " Ms. Wang said.

Ms. Wang told reporters that for the disaster area's auto parts suppliers, we hope that the host plant can give priority to the delivery of arrears. "I hope that for the Wuhan auto parts suppliers, the customers will be able to get the money in time. Now our company's customers owe $1 million, but one to two million is very important for small businesses.

As China's automobile market has been declining for two consecutive years, many host factories lose profits and are faced with enormous pressure of capital flow. It is not uncommon in the industry to default on suppliers' debts and lower prices.

"We know that car companies are also very difficult now, and car sales are not very good. But we still hope that the host plant can help these Wuhan parts partners overcome the difficulties. The loss of the host plant will now be gradually transferred to the suppliers in the upper and middle reaches. If the host plant fails to pay normally, there will be a chain reaction. If suppliers are dead, is the existence of the host plant still meaningful? " Ms. Wang said.

She said frankly, from the present point of view, the impact of Wuhan parts suppliers is from many aspects, the first problem facing is the resumption of work problems.

The problem of reemployment involves human resources and material resources. Only when all the resources in the supply chain are restored to normal will they be able to resume work normally. Our small and medium-sized enterprises need to prepare some disinfection resources, such as alcohol, masks, gloves and other materials. I know there are many preparations, but the 84 liquid I ordered online, alcohol can not arrive later. How can I return to work? Even if we go back to work, the transportation of logistics is also a difficult problem. Ms. Wang said.

For small and medium sized parts enterprises, the bigger worry is that market share is replaced by competitors. Generally speaking, the host plant will choose several suppliers to ensure the flexibility of the supply chain and to lower the cost. If A point supplier is unable to supply, there is possibility of selecting B point and C point supplier.

"Whether to replace the parts depends on the complexity of the components and the strength of technology. I am certainly worried about the appearance of B points or even C points, and the market share will be reduced, and the turnover will decrease correspondingly. All along, we have been upgrading their industrial capabilities, that is, they are afraid that they will be grabbed by B suppliers. To improve their industrialization capability, we need capital and reinvestment. " Ms. Wang said.

However, he told reporters that there is no particular worry about being replaced by competitors. He said that some customers have promised to retain market share or retain it.

"This is mutual understanding, customers also know that we are Wuhan enterprises, facing a special period, but the technical conditions still exist. They are also very considerate of our mood and will not fall into the trap. If we can't afford it now, we'll find other enterprises to give it first, and then we can make up our share later. But this is only oral, and there may be some difference in actual implementation. " He said.