Posted on 02/04/2020 11:14:03 AM PST by RightGeek
Hyundai announced Tuesday that it is suspending production in its South Korea manufacturing plants due to supply chain problems caused by the coronavirus outbreak in China.
The world's fifth-largest automaker said in a statement that the suspension is a result of "disruptions in the supply of parts resulting from the coronavirus outbreak in China," The New York Times reports.
Hyundai has plants worldwide, but has been hampered by the fact that it gets many of its parts from China. Several plants in China that make the parts that the automaker needs have shut down because of the continued spread of the virus, which has killed more than 400 people, according to the Times.
The auto company told the Times via email that it was "reviewing various measures to minimize the disruption of its operations, including seeking alternative suppliers in other regions."
(Excerpt) Read more at thehill.com ...
Agree - it’s the magnitude of the potential disruption that will cause big-ass problems. For example, Toyota might have to put 200 contingency plans together (for their various China-sourced parts) at the same time that Honda and Ford are doing the same.
...but, at worst, it will be a wake-up call!
Lot of sleepless nights in companies that are diverging supply chains.
I would love for them to reconsider sourcing more local supply in the USA. We’re way more stable than China.
A lot of people here on FR (and elsewhere, to be fair) seem to think that someone can wave a magic wand and magically all this lost industrial capacity will be back instantly and step in to replace the Chinese, so anything just cutting off the Chinese cold turkey is good with no downsides.
The reality is that replacing the smelter alone will take months if not years - the same thing with all the other missing industrial capacity.
“ “I’m pretty sure there is enough unsold auto inventory to get us through any temporary disruption.”
For a few weeks, I’d agree - but when we get into months, which I think is more likely, not good.”
****
Perhaps this will be motivation to relocate supplier plants here in good ole USA?
The ones we no longer have due to political idiocy and malice?
It’s probably can’t get parts from China — or anticipating that the Chinese suppliers are going to stop shipping parts in the near future.
Exactly right. On-shoring supply is going to be a huge problem.
A bit off-topic, but how in the world can the Chinese build a new “hospital” in eight days? Maybe it’s like an army field hospital with tents?
True, I don’t know how much they rely on China, but depending on the parts, a part stoppage could necessitate a shutdown.
But if that’s true, we might even see US manufacturers stopping production to re-source components.
They are prefabricated buildings. They aren’t intended to be long-duration structures and the Chinese have announced their intent to burn them after use for easier decontamination.
If it gets worse, they will likely move to actual military rapid construction structures and tents. We have similar disaster plans in the US (short of the whole burn-after-use thing.)
Bunk. It is all upside. BMW built a production plant in Mexico in < 1 year. One in SC in even less time. Plus the actually building of factories stimulates GDP, in incredible positive ways.
I’m thankful Trump stated the process three years ago of bringing jobs and industry back to the United States.
China could easily go unstable and our ‘just in time’ supply chains could have failed.
Now we have a chance... our steel mills didn’t close down - our energy’s not dependent on command economies .... and foreign money that seeks safety runs to us.
That could be part of the reason the stock market’s up...
LOL, yep!
I just remember thinking “Just cuz you can get out of our car and slip it in between those two $500 turdmobiles doesn’t mean the other car owners won’t ding the crap out of your Smaht Pahking Hyundai getting into into their own vehicles.
It will be interesting to see if other manufacturers follow this example. An epidemic can disrupt both supply chains and markets. Either way, this will have a negative effect on the world’s total productive output.
Still a few bugs in the system.
“Perhaps this will be motivation to relocate supplier plants here in good ole USA?”
...but then you go sub-tier, and lower levels, down to raw materials, and then you have the world of production machinery. Getting China out of stuff completely is a HUGE challenge, even for an automobile water pump (for example). It will probably take a full decade...but yes, maybe we’ll start thinking right about it.
“But if that’s true, we might even see US manufacturers stopping production to re-source components.”
That’s what I’m afraid of. Over the past 20-30 years, lots of US manufacturers began sourcing parts from offshore even if they built the final product here.
Thanks. Hadn’t heard that. Burning them after this is over makes lots of sense. Except they should probably erect high-temperature incinerators to destroy them.
Burning them down with napalm from flamethrower teams works just as well. Napalm can burn at up to 5000 degrees Fahrenheit. Pretty sure that will take care of the problem. No need to build an incinerator on site.
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