Warfare in Automotive

Russia’s war reveals the fragility of the automotive supply chain. Mandy Parry-Jones, Editor of Vehicle Technology Engineer magazine with SAE-A, discusses the changes in the industry.

Disruptive and far reaching this is the impact of the Russian invasion of Ukraine and it is affecting every industry including automotive, which was already struggling after the pandemic, the chip shortage and the pressure to move to an electric and hydrogen future. Chair of Skoda Thomas Schaefer said the Ukraine was an integral part of its supply chain and not just for cable harnesses, but other components and raw materials. But the harnesses were its biggest problem as you can’t retrofit these. Porsche is also experiencing wiring loom shortages as are other manufacturers. Ukraine had become a popular place to manufacture wiring harnesses with assembly mostly by hand, requiring large numbers of skilled workers but labour was cheap and well educated so it worked a treat, until it stopped working. Ukraine was also in close proximity to European car factories making it even more attractive. Skoda has partially relocated cable harness production from Ukraine to the Czech Republic in close coordination with the affected suppliers. It is also securing additional production capacities in Morocco and other countries to safeguard the company more effectively against disruptions in the future. The arrangements will allow for current production volumes to be doubled if necessary. Because of war-related supply bottlenecks, Skoda was forced to suspend production of its all-electric ENYAQ iV for eight weeks due to a shortage of cable harnesses. So the carmaker and its suppliers quickly began looking into duplicating the production of cable harnesses at other manufacturing plants in Europe and North Africa. Its production facilities are now staffed by 35 women from the Ukrainian plant in Lviv, who are training new employees. The company is also planning to duplicate the production of high-voltage cable harnesses required to charge electric vehicles these will be manufactured in Romania. Shipping in and out of Ukraine is also an ongoing issue even if some manufacturing remains working in the country with shipping companies such as MSC and Maersk suspending container shipping from the region. Rail traffic was also suspended on the Trans-Siberian Railway which supplies Chinese car factories. Two major raw materials palladium and neon are supplied by Russia and Ukraine these are critical to the production of integrated circuits and catalytic converters with an estimated 85 percent of total global palladium production going to production of catalytic converters. Two Ukrainian companies Ingas and Cryoin are major suppliers of semiconductor grade neon, these companies have shut and so almost 50 percent of the total global supply is unavailable. Carmakers are accelerating efforts to use less palladium and more platinum due to worries over palladium supply from Russia, the World Platinum Investment Council (WPIC) said, predicting a large surplus in the platinum market this year. They were already shifting to platinum, which is cheaper than palladium, to save money, but a faster transition would increase platinum demand and could lift prices while having the opposite effect on palladium. Add to that the fact that Russia is, or was, the world’s largest nickel producer which is a key component in electric vehicle batteries and it’s a mega storm for the car industry. Russia is also a major supplier of iron and aluminium. Sales of cars to Russia have slowed or stopped completely with companies such as Aston Martin pausing sales, Ford has suspended its joint venture in Russia, General Motors has stopped all exports, Jaguar Land Rover has halted deliveries, Daimler Truck has suspended its Russian operations and the list goes on. Inside Russia the country is feeling the impacts of trade sanctions and its inability to source the products it needs for vehicles it produces. The country has officially dropped its safety standards and there is now no requirement for airbags after a shortage of electronic components and parts. ABS systems and other items will also be affected as will its environmental standards bringing them back to standards for vehicles produced in 1988. Prices for spare parts in Russia have skyrocketed with suppliers now unable to readily supply spares and there are waiting lists, not surprisingly prices are up, and the black market is doing well in reselling stolen parts. “At the moment, only two enterprises produce cars more or less stably – the Ulyanovsk UAZ and the Tula plant Haval,” reported Izvestiia. In an interview with Ridus.ru, industry expert Sergei Aslanyan explained the depth of the crisis. “We don’t have electronics factories, we don’t have anything to make an engine out of. We have ‘Niva,’ which is 45 years old, 20 percent consists of imports,” he said referring to one model produced by Russian manufacturer Lada. But he added, “It has pistons and piston rings from the American corporation Federal Mogul. And now we will even have nothing to assemble the Niva from. What are we going to make air bag systems from? Who will present us with an airbag? Nobody. We don’t even have bearings.” And the country’s aviation industry is also under the hammer with airlines also suffering from parts supply problems and having to use parts taken from broken aircraft to keep other aircraft operational.

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