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Tuesday, 28 April 2020 20:22

The COVID-19 Impact on Automotive Manufacturing

Written by Laurie Harbour, Wards Auto

Index

The COVID-19 pandemic has made one thing clear: Not every manufacturer is going to come out of this crisis intact.

If your business went into 2020 in an already weakened state, it’s going to show on the backside.

 

Now is the time to step back and talk about what the business is going to look like when operations resume. One of the most critical factors of a company’s longterm outlook is the response of leadership, and this situation is going to challenge leaders now more than ever.

 

Those who step up, maintain their composure, continue to communicate with their team and look at every aspect of the business are the ones who will be best positioned to bring their companies back from a very difficult situation.

 

The ones who panic, don’t engage with their team and don’t ask for help might not make it out.

 

When it comes to automotive, the shutdown of OEM assembly plants has had a pronounced ripple effect on the rest of the industry, with thousands of suppliers and sub-suppliers being directly impacted. Looking forward, with everyone planning to relaunch at roughly the same time, there will be added strain placed on the global supply chain.

 

Ramping back up certainly will be a major challenge for the entire industry. There will be a slow restarting of operations, first for the plants and then for suppliers, with the plants that support the most profitable vehicles being the first to come back online.

 

In North America, most plants will be opening in May with limited or staggered shifts and other safety precautions in place. As the supply chain ramps up, the OEMs will gradually increase volumes. They will draw on their firsthand experiences from China, South Korea and other locations that already have resumed operations to inform decisions in the North American market.

 

While all of this ultimately is a step in the right direction, the fact is that the industry is still facing serious headwinds as restrictions on public life remain in effect and will continue to be in place for some time.

 

For production shops, there will be some bounce back but not a full return to the 17 million vehicle run-rate. On the tooling side, shops will build out what they currently have, and then quotes will be limited as OEMs pick and choose which programs to pursue in the near future.


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