The spread of production shutdowns hitting carmakers in the US and Europe as they wait for parts from tier suppliers stretched by the sudden resurgence in assembly is showing no sign of abatement this week. But it has been good news for emergency logistics providers who have seen demand for their services remain strong since last summer.
In the latest European incident, Volkswagen was forced to suspend production at its Wolfsburg plant in Germany on Monday this week, cutting three shifts because of a parts shortage affecting both its suppliers and its engine plants. The stoppage follows a one-shift cancellation there for similar reasons on 22 January.
VW said that the most recent idling was put into effect to balance the supply of parts. “We hope to be able to stabilise the material supply chain with this production stop,” a company spokesman confirmed.
The recent strong demand shown for German vehicles in both China and the US is making parts supply a particular issue for carmakers such as VW; BMW and Daimler are two others increasing capacity to keep up with demand in export markets.
Volkswagen is said to be targeting an increase in deliveries by 5% this year after deliveries in China set a new record last year, growing 37.4% to 1.9m units. In the US, the group brands delivered 360,300 units during the twelve-month period, corresponding to growth of nearly 21%. This helped push record total global sales to a record 7.14m vehicles last year.
Tiers suppliers along the supply chain are now feeling the pressure to meet this demand, with many relying on emergency shipments to meet critical production schedules.
“OEM production continues to be threatened by supply of parts, through knock-on effects of the recession,” commented Brad Brennan, CEO of Evolution Time Critical.
Tier suppliers have encountered problems in restoring resources, he said, and are struggling with increased volumes and changed delivery profiles.
“Many of our commissions have been to support lean supply chains which are pulling on strained production facilities at the end of the chain.”
Brennan described how Evolution Time Critical provided a series of deliveries this year from a tier one that had to temporarily suspend production at a plant and move it to another country.
“This involved a number of critical deliveries using our Back-On Track service, where we gradually moved 'through the gears' from emergency airfreight to standard airfreight , then dedicated road, until we were able to hand back to the normal supply chain logistics operator,” he explained.
The situation has also affected many of the scheduled services run by the large 3PLs who have taken out or sold assets used to move materials, making it harder for them to respond to the fluctuation in demand defining the market at the moment.
Priority Freight’s managing director, Neal Williams, said that since last July the company had seen a consistently high demand for its services, with the exception of last August’s plant shutdowns, but that January had been its busiest month thus far.
“We’ve had days when we’ve chartered 20 aircraft per day and this isn’t restricted to a tier supplier or one OEM. It has been spread across the tiers, we’ve had a huge amount of activity from tier three to tier one.”
Inbound at Wolfsburg
VW’s plant in Wolfsburg is lauded by the company as “the biggest motor vehicle factory in the world under one roof”, with a daily production capacity of about 4,000 vehicles, producing the Golf, Golf Plus and Touran. Monday’s stoppage affected the production of 3,000 vehicles.
The company receives parts and material for these vehicles from around 1,900 companies on a daily basis, but disruption to any one of those suppliers requires a flexible process to adjust intake, which for VW is supplied by German specialist Inform and is called SynchroSupply.
“The reaction in SyncroSupply is fairly simple, as it is a well-defined production stop for a specified duration,” said Inform’s vice president of Manufacturing Logistics, Matthias Berlit. “In these cases SyncroSupply either receives information via an interface that the material is not needed or the Control Tower manually deletes the time-windows for all deliveries across three shifts.”
Delivery and production are shifted parallel and made ready to handle delivery ahead of production taking off again.
Material supply problems have also recently hit North America. Last week Ford suspended production at its Dearborn plant in the US because of a parts production also affecting engine supply (read more here). It followed this with a stoppage at its Kentucky plant on Friday.
Chrysler’s Windsor plant in Ontario also began a week-long stoppage on Monday this week because of a part shortage but would not discuss the details, stating only that it was not related to engine production and that it was “constantly monitoring [its] supply base and delivery systems.”
