Parts of Europe begin to lift quarantine measures for manufacturers
The supply chain challenge ahead
The current impact of the COVID-19 outbreak on the European automotive industry cannot be understated. In a recent report by the European Automobile Manufacturers Association, estimates show production losses of 1.5 million vehicles.
As many OEM’s and suppliers are preparing to restart their factories, robust supply chain management processes are essential. Processes and systems at all levels will be tested as the auto industry comes back to life.
The average production shutdown across Europe now stretches beyond 21 days. 1.14 million Europeans workers employed by the OEM’s have been impacted so far and thousands more workers working within the supply chain have been disrupted. The figures have grown rapidly, and with the prolonged shutdown and social restrictions, the effects will likely linger.
Some governments are cautiously lifting restrictions
Many European government leaders have announced strategies to begin lifting restrictions. Austria announced a phased approach to returning to ‘normal’. The Austrian “Phase 1” began on April 14th and included manufacturing businesses. Similar easing measures are being rolled out across Italy and Spain. Angela Merkel, the Chancellor of Germany, announced that she is was not ready to release such a roadmap. Current restrictions in Germany are expected to be in place until at least April 19th.
Automotive OEM’s have made the following announcements:
- Daimler announced they will restart work on April 20th, in Sindelfingen, Bremen and in the van, truck and bus factories.
- Volkswagen is set to begin production ramp-up from April 14th, in a select number of factories, but operating at a reduced capacity, with further details expected to be released in a statement after Easter.
- BMW announced on April 7th that they will extend their production lockdown until at least April 30th.
- Ford’s European operations will remain closed until at least May 4th.
Disruption will continue, successful outcomes will require vigilant monitoring of upstream risks
Although these announcements are welcomed by the manufacturing community, in this rapidly changing environment, governments will continue to closely monitor and release restrictions on manufacturing. With limited advanced governmental communication for openings and closures, companies that closely monitor the current disruption levels within their supply chain will gain an information advantage.
The Automotive Manufacturing Disruption Index, published by IHS Markit on April 7th, indicates that European and South American manufacturers are currently the most disrupted. This is due to restrictions on the workplace, as well as restrictions on internal movement. These factors create friction for business, goods, and people and have exacerbated strains within the supply chain between Tier 2 and Tier 1 suppliers, and contributed to delays in the customs clearing process.
Due to their location and supply chain, some suppliers have been more impacted than others. Bosch and Continental, both with major production facilities in Germany, are currently estimated to be running operations with half their normal staff levels, the impact on output has not been published.
To help organizations plan for ramp-up, members of the Seraph team have developed resources that can provide insight and ideas on ramping up your production successfully, creating transparency with suppliers, and specific questions to ask within your organization.
European OEM Restarts
(Reports are updated daily at 8pm GMT please click here for the expected European Automotive restarting dates
Molly Kenny: Mkenny@seraph.com
Thomas Kowal: Tkowal@seraph.com
Seraph's team of operational managers and senior consultants intercede on our client's' behalf to fix a crisis that is putting the business at immediate risk, turnaround a situation that is damaging the bottom line or restructuring to improve the balance sheet. Seraph has successfully delivered projects in the following regions: The Americas, Europe, China, and India. Seraph's Industry Expertise Includes Aerospace, Automotive, Energy Infrastructure, Healthcare, and Medical Devices. Through our other operating companies, we are continually looking for distressed situations where we can put our expertise and capital to work to create value.