Thursday, February 6, 2020
The coronavirus, which started in the Chinese city of Wuhan in late December and is responsible for a reported 425 deaths and more than 20,000 confirmed cases as of Tuesday morning — and considerably more by the time you view this — has scaled enough that it is impacting manufacturing supply chains.
Those impacts are now taking a toll on major manufacturers, with a handful of automakers temporarily closing plants in China, including Hyundai, Tesla, Ford and Nissan. Hyundai has gone a step further, announcing Tuesday in an email that it is suspending production lines at its car factories in South Korea, making it the first such manufacturer to close production outside of China.
Multiple media reports quote the Hyundai emailing saying its decision to close its Korea plants is due to disruption in the supply of parts resulting from the coronavirus outbreak in China, and that the company is reviewing various measures to minimize the disruption of its operations, including seeking alternative suppliers in other regions. The email added that factory suspension schedules would vary by production line.
Bloomberg notes that Hyundai is dealing with a shortage of a wiring component made at a South Korean supplier’s plant in China, with that plant closed after a worker there was infected by the virus, according to Hyundai Motor’s labor union. A union spokesperson told Bloomberg that production there may resume Feb. 11 or 12.
Hyundai and its subsidiary, Kia, produced 7.2 million cars in 2019, and that its network of factories across Russia, Turkey, the Czech Republic and in Montgomery, Alabama should be able to make up for its lost production in Korea.
However, the Hyundai news may signal that manufacturers that rely on parts from China are now facing serious disruptions, and the longer those Chinese factories are shut down, the worse the issue becomes. China has closed all factories through at least Feb. 10.
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