Santa is roaring up his sleigh! Here’s a gift from me to you: another edition of Transmission, a twice-weekly newsletter assembled to chronicle the seismic shift in auto supplier networks as the industry goes cross-border and electric.
Vaccinations not required, but encouraged by GM and Ford
Back in the spring, the virus was the lone cause for production halts within the automotive industry as vehicle assembly and production wasn’t initially deemed as “essential”. McKinsey and Company estimates that the top 20 OEMs in the global auto sector will see profits decline by approximately $100 billion after 2020 is finally over, a roughly six-percentage-point decrease from just two years ago.
After months of anticipation, COVID vaccines are finally rolling out across the country. This comes as good news for automakers throughout the globe as they look to leave this year full of setbacks in the rearview. However, CNBC reports that both GM and Ford have decided against a mandatory vaccination policy, even though the Equal Employment Opportunity Commission (EEOC) allows employers to require workers to receive it.
United Auto Workers President Rory Gamble’s position has been that workers, although they shouldn’t be forced to be vaccinated, should seriously consider the vaccines. “I believe it’s important for as many members as possible to be vaccinated,” Gamble said in an emailed statement to CNBC. “That said, just like the policy over flu shots there will be some that over religious beliefs, or medical history or personal beliefs will have concerns about being vaccinated and so I don’t believe it should be mandatory.”
While both GM and Ford are on the same page about vaccinations, Fiat Chrysler, another major Detroit automaker, is still looking into the matter.
In November, Ford ordered a dozen ultracold freezers for the purpose of storing Pfizer’s vaccine with hope of providing employees with easy access. Over in Germany, Volkswagen will be offering the vaccine at company headquarters with the same hope in mind.
Since the EEOC protects employers against being sued for discrimination by requiring the vaccine, it’s strange that these automakers aren’t requiring employees to get vaccinated. Respecting people’s rights are important, but the last thing this industry needs is another outbreak which would cause more delays in production and dealership delivery.
Suppliers working through the holidays
The pandemic has seen the automotive supply chain operate a little differently this year. Production was disrupted for multiple weeks and suppliers have been working to recover from lost production times.
In a recent interview, Matt Silver, CEO of Forager, spoke about the current state of the automotive industry pertaining to cross-border supply chain movement. “Generally automotive suppliers stop shipping for the last two weeks of the year,” Silver said. “One of the big changes [this year] is that they’re still playing catch up to make up for lost time.” Silver indicated that one of Forager’s customers, a Tier 1 supplier, is shipping through the end of year.
Border crossings in Laredo, TX were down for a big portion of the year. Truck crossings were down 22.8% in April. May saw a 31.8% decrease in movement as well. This trend of lower truck crossings compared to last year continued all the way through August. However, the trend started to shift in September, where truck crossings were up 7.7% y/y. October saw an increase of 5% y/y.
Daily wait times at the Colombia Solidarity Bridge in Laredo indicate that truck traffic is flowing smoothing compared to average wait times from last year. And while the Bureau of Transportation hasn’t updated data for crossings for November or December yet, there’s a good chance that the positive trend will continue since suppliers, as Silver pointed out, are still working hard to rebound from this year’s pandemic disruption.
Silver also shared a clever metaphor comparing the automotive supply chain to a house of cards. The supply chain is a complex network full of intricate pieces that play a part in producing vehicles. If one supplier has an issue, it can cause delays in auto production when OEMs have to wait on components. The pandemic saw the house of cards tumble as numerous disruptions rippled throughout the year. However, the supply chain is slowly working back toward full capacity and partners are learning from this anomaly in case something similar happens in the future.
Industry News
- Mercedes-Benz unveiled 6 new EV prototypes set to be produced in 2021 and 2022. The German automaker is hoping for a better outcome then when it unveiled its first EV, the EQC electric SUV, which had a slow rollout in North America.
- The European Commission proposes to update EU legislation on batteries, delivering its first initiative announced in the new Circular Economy Action Plan.
- Curious what 2021 has in store for new EV unveilings? Check out this article here for vehicle launches to be on the lookout for.
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