VW, Porsche, and BMW. Face Supply Chain Challenges As Western Ukraine’s Wire Harness Production Stops
The catastrophic Russian invasion of Ukraine is having an impact on more automakers, as German auto giants Volkswagen, Porsche, and BMW struggle to obtain wire harnesses from their regional suppliers.
Wire harnesses are required to organize kilometers of vehicle cables, hence this component is essential when designing autos. However, as the Russian onslaught on Western Ukraine escalates, suppliers like Leoni, Fujikura, and Nexans have stopped doing business there, reducing output of this component.
This development has already resulted in supply chain challenges, with delivery bottlenecks affecting some Volkswagen assembly plants, the second-largest manufacturer in the world. The Leipzig facility of Porsche’s luxury division has already stopped production, and BMW has also been impacted by the shortage of wire harnesses.
BMW experiences delivery problems because of a lack of wire harness
BMW said in a statement that production halts will occur as a result of supply shortages, which are hurting the company’s supply chain. BMW further stated that they are in extensive talks with their suppliers to resolve the aforementioned problem.
For BMW and all automakers, a wire harness is essential because automobiles cannot be constructed without them. This group of components is essential because a wire harness enables automakers to neatly package up to 5 kilometers of cables in a typical car. The building of the car is a complete chaos without the wiring harness.
In a statement, wire harness supplier Leoni said it is attempting to make up for production losses brought on by Russia’s war of aggression against Ukraine. With plants in Stryi and Kolomyja, Leoni has two wire harness manufacturers in Western Ukraine that are both experiencing production halts due to the fighting.
There are several more businesses producing wire harnesses in Western Ukraine besides Leoni, including Germany’s Prettl, SEBN, Kromberg & Schubert, Forschner, and Japan’s Yazaki. These businesses decided to establish wire harness manufacturing facilities in Western Ukraine due to a more affordable, skilled labor force.
The fabrication of wire harnesses is essential to Ukraine’s economy.
In 2020, wire harnesses turned out to be the most important automobile component that Ukraine sold to the European Union. According to Comtrade data compiled by consulting firm AlixPartners for that year, wire harnesses made up close to 7% of all EU imports.
According to statistics provided by the Ukrainian government, 38 plants totaling more than $600 million were built in the nation by 22 automotive businesses. Over 60,000 Ukrainians are employed by these businesses, the majority of which make wire harnesses.
The aforementioned facilities are adjacent to German automakers’ low-cost manufacturing plants that they have established in the central European region as well as to German auto factories that produce vehicles. Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, says that in order to handle this problem, which is not going away anytime soon, carmakers will need to develop alternate solutions for the short- and mid-terms.
Image Source: BMWGroup.com