Car manufacturers stopped production after Ukraine invaded; Other companies also compete
Cars drive away from Kyiv, Ukraine, as Russian forces close in on the capital. (Reuters)
Several companies, including automakers Volkswagen and RenaultTire maker Nokian Tires, and agricultural equipment giant John Deere, on Friday outlined plans to close or shift production in the wake of Russia’s invasion of Ukraine.
After invading earlier this week, Russian forces advanced on Friday when missiles hit Kyiv and authorities said they were preparing for an attack aimed at toppling the government.
The United States announced sweeping export restrictions on Russia on Thursday, restricting the country’s access to global exports ranging from commercial electronics and computers to semiconductors and other products. aircraft parts. That could cause companies to change production plans or look for alternative supply routes.
Invasion is a factor in consulting firms JD Power and LMC Automotive reduce their 2022 global new car sales outlook increased by 400,000 vehicles to 85.8 million units. The auto industry has had to deal with a tight supply of vehicles due to a global shortage of semiconductors.
“The already tight global vehicle supply and high prices will come under additional pressure based on the severity and duration of the conflict in Ukraine,” said Jeff Schuster, LMC global president of vehicle forecasting. “.
He added: “Rising oil and aluminum prices will likely affect consumers’ willingness and ability to buy cars, even as inventories improve. “We have significantly downgraded the forecasts for Ukraine and Russia due to the escalating conflict between the two sides and the consequences related to sanctions against Russia.”
Wells Fargo analyst Colin Langan said the conflict could push oil prices above $100 a barrel, adding to inflationary pressures on European and US consumers. While consumers are willing to pay above the sticker price to get new carmaintain higher gas price could affect the long-term recovery, he said.
Germany’s Volkswagen said it would suspend production for several days at two German plants following delays in getting parts made in Ukraine.
France’s Renault said it would suspend some operations at its car assembly plants in Russia next week due to logistical bottlenecks due to a lack of parts. It did not specify whether its supply chain would be affected by the conflict, but a spokesman said the move was the result of a fortified border between Russia and its neighbors. parts are shipped. vans.
According to Citibank, the automaker is among the most exposed Western companies to Russia, where it generates 8% of its core income.
“The disruption is mainly due to tighter border controls in transit countries and forced changes to some established logistics routes,” said the company’s Russian unit, which did not give a name. any country.
Russian carmaker Avtovaz, controlled by Renault, also said it may suspend some assembly lines at its plant in central Russia for a day, on Monday, due to shortages of electrical components. deaths globally. Avtovaz also made no mention of the invasion in its statement.
Finnish tire maker Nokian said it is shifting production of some key product lines from Russia to Finland and the United States in preparation for possible sanctions following the invasion.
Agricultural equipment maker Deere & Co on Friday said it had closed its office in Ukraine in recent weeks as a precautionary measure. It employs about 40 people in Ukraine.
Other companies
Aptiv CEO Kevin Clark said on Thursday that over the past few months, the American auto parts maker has swapped high-volume parts made in Ukraine for lower-volume products. so we’re better positioned to manage disruption.”
Japanese auto supplier Sumitomo Electric Industries, which employs about 6,000 people in Ukraine to make harnesses, said it had suspended operations at plants there and was talking with customers about the possibility. replace supplies from elsewhere.
Ford According to Ford’s website, Motor Co has a 50% joint venture in Ford Sollers, which has three assembly plants in Russia. Ford said in a statement that it is “deeply concerned” about the situation and will “manage any impact” on its business in real time.
The US automaker also said it would follow any trade sanctions laws, but declined to discuss whether Sollers plants would be affected.
While French car parts Manufacturer Valeo said the direct impact on the company is minimal, the invasion could drag down the industry’s production volumes and raise the price of energy or raw materials.
Catalytic conversion metal
For automakers, one of the supply chain concerns created by the Ukraine conflict centers on the metals palladium, platinum and rhodium used in catalytic converters that filter emissions. .
Mark Wakefield, co-leader of global automotive practice consulting firm AlixPartners, says Russia produces about 38% of the world’s palladium, excluding recycled materials.
“It’s hard to think of a global auto business without palladium coming from Russia,” he said.
Automakers shouldn’t face a shortage of palladium right away, says Wakefield, because there are reserves of the metal in the pipeline. London. “It took a six-month journey before palladium found its way into cars,” he said.
Wakefield said aluminum prices were up before the Ukraine conflict. The cut in Russian aluminum supplies will add to the cost pressures on carmakers.
Japanese The largest steel producer, Nippon Steel Corp, said on Friday that it would secure alternatives to raw materials it buys from Russia and Ukraine in the event of supply disruptions.
Nippon Steel buys 14% of iron ore pellets, small iron ore pellets used in steel production, from those countries. Officials said they moved sourcing to Brazil and Australia and the impact must be minimal.
Meanwhile, Russia said it was partially restricting Meta Platforms Inc’s access to Facebook, accusing it of “censoring” Russian media.
Delta Air Lines Inc, which does not operate services to Ukraine or Russia, said on Friday it had suspended codeshare service with Russian airline Aeroflot.
Amazon.com Inc’s home security subsidiary, Ring, said it is working closely with its partners at Squad in Ukraine “to support the safety and well-being of our team and family. surname.” According to LinkedIn data, Squad employs more than 700 employees, some of whom worked for the Ring Ukraine research arm until about a year ago.
Amazon would not comment further on its footprint in Ukraine or Russia, or on how US trade actions would affect its business, if at all.
Toronto-based Kinross Gold Corp said its underground Kupol gold mine in the extreme northeastern corner of Russia was operating normally. The company says that nearly all of its employees in the country are Russian, and that Kupol has stocked all five of its supplies in place, as it operates in a cold region. Kinross added that it is reviewing the latest sanctions against Russia to see how they might affect operations.
