Jiangsu, Zhejiang and Shanghai automobile manufacturing: the situation is improving

Author 丨 Peng Suping

Editor 丨Bao Fangming

Image Source 丨Visual China

Chen Xiao had not returned home for more than a month.

He is the project leader of an automobile factory in Jiangsu, Zhejiang and Shanghai, and returns to his home in Shanghai on weekdays and weekends in the factory area. In early March, there were signs of the epidemic in Shanghai, and in order not to delay the task of the factory, he did not go home and simply stayed in the city where the factory was located - I did not expect to stay, that is, nearly two months.

"I'm in good shape in every way." Chen Xiao talked about his recent experience and spoke in a calm tone. Since April, the pace of production in the factory has slowed down, and his work is not as busy as before, but he can "pull his colleagues to dinner every day" and "feel more empathy with employees".

The city where Chen Xiao is located, more than 100 kilometers from Shanghai, is an important manufacturing base in the Yangtze River Delta region. Since March, Suzhou, Shanghai and other places have opened large-scale epidemic prevention management, many factories have stopped production, and some downstream OEMs have been affected, and the factory managed by Chen Xiao is no exception.

This is a small vehicle manufacturing base, with an annual production capacity of about 100,000 vehicles and thousands of employees. The situation was fine in early March, but by the end of March, the supply of spare parts began to fail to keep up, and although the area was not sealed, the factory was forced to shut down for a day or two from time to time.

This is not an isolated case. Previously, on April 9, Weilai, a new car-making force, issued a statement saying that due to the suspension of production by supply chain partners in Jilin, Shanghai, Jiangsu and other places, the company also suspended vehicle production.

Although it did not take long for Weilai to say that production has gradually recovered, with the extension of Shanghai's sealing time, the resumption of work and production of the automotive industry chain has attracted widespread attention in the industry.

As an important base for the national automobile industry, Shanghai acted quickly and launched the first batch of "white list" of enterprises resuming work and production on April 16, as well as related epidemic prevention guidelines. In the first batch of "white lists", there are more than 250 cars-related, accounting for 40%. In the past week or so, SAIC, Tesla and other automakers and a number of parts suppliers have resumed production, and the gears of Shanghai's auto industry have turned again.

In automobile manufacturing outside Of Shanghai, the supply chain has also begun to recover. Chen Xiao told the 21st Century Business Herald reporter that although the current production beat is still limited, the most difficult stage has passed, especially the situation of logistics and transportation is slowly improving, and some local parks that implement closed management also show signs of loosening.

Recovery takes time

Like many other factories in the region, the auto plants managed by Chen Xiao have a high proportion of supply chains in the Yangtze River Delta, so the impact this time is not small.

Until now, the factory has not reached the previous production scale - the upstream supply cycle has become longer, the inventory is almost "running out", and it can only be rearranged according to the situation of parts. "It can only be produced every three to five places, and the beat is not up to the previous level." Chen Xiao said frankly.

On the days of suspension of production, Chen Xiao will concentrate on arranging some training scattered on weekends on weekdays to pass the time for everyone. "So I stay with my employees, and they have a sense of belonging. If they don't do anything, it is estimated that they will have no bottom in their hearts. Chen Xiao will also cook and eat with the employees to tide over the difficulties together.

The resumption of work and production of companies in the Shanghai auto industry will objectively alleviate the supply chain problems of automakers, and Chen Xiao also feels that the lowest trough time has passed - around mid-April, the factory can only reach one-tenth of the production capacity, and at that time, "many enterprises are like this."

At present, the situation is improving, at least a number of important suppliers in Shanghai, Suzhou and other places are back in operation, and the supply of parts will slowly recover, but their production capacity will also need to gradually climb, and the time received by customers in different regions will vary.

In this context, the competition between car companies will be more intense. Chen Xiao said that the full recovery of the supply chain will take time, and the process will be very "painful" - a few joys and a few sorrows, after all, resources are limited.

More critical is to promote the resumption of work and production of the entire industrial chain. The automotive industry chain is long and complex, and the first to resume work are relatively close to the suppliers of the automaker, but the more upstream, small, such as enterprises in the field of raw materials, many still have not resumed work.

Chen Xiao pointed out that on the one hand, this limits the efficiency of some suppliers to resume work and production, and on the other hand, it also puts these small enterprises at great risk. "Large enterprises have a relatively strong ability to resist risks, and they can still maintain work stoppages for a period of time, but these small enterprises themselves do not have much profit, and they may not be able to eat if they stop work for too long." He worries that eventually some nodes in the industrial chain need to be reconnected.

Logistics and transportation have improved

The city where Chen Xiao's factory is located has not carried out long-term and large-scale sealing and control, but the epidemic prevention work has been quite strict, which has more or less affected the operation of enterprises. The good news is that the situation is slowly getting better under the guidance of relevant policies.

The most widely affected is logistics and transportation. Chen Xiao remembers very clearly that in early April, the factory was still producing, but multiple local high-speed channels were closed, countless trucks flocked to an exit, and the epidemic prevention process was cumbersome, and the "customs clearance" time was longer than the usual most congested holiday holidays.

"It takes more than ten hours for the truck to get off the highway, and it takes a long time for people to get off the road." Chen Xiao recalled. Enterprises are also miserable, running to many places, opening a lot of certificates, in order to successfully receive their own materials.

In mid-April, the local government issued a new epidemic prevention policy, and freight vehicles can apply for electronic passes on relevant apps, and the process is much simplified.

"The current regulation is that for freight vehicles in key epidemic-related areas, someone must pick them up and carry out a fully closed-loop handover." From the time he went into town to the time he left, he had to follow and not let him get out of the car — we now have more than 60 people doing this. Chen Xiao introduced that although this workload is not small, it ultimately improves the efficiency of the entire logistics.

For freight vehicles in non-key epidemic-related areas, it is also necessary for enterprises to implement control requirements. "Some people have to stay overnight, they need to concentrate on sanitize work, and we set up a point near the factory to arrange for them to quarantine." Chen Xiao also added that this is not easy for enterprises, because it is impossible for every company to have such conditions, so the logistics that can be restored are actually limited.

In addition to road transport, the epidemic prevention policy of relevant logistics places is also being relaxed. Some time ago, the logistics park near the factory was sealed, many goods could not be turned around, and Chen Xiao's vehicle warehouse was also sealed, even if it was a good finished product, it could not be transported out. "In the past two days, we are coordinating with the relevant departments, and as the epidemic is gradually controlled, it should gradually improve." Chen Xiao said.

Supply chain management needs to be reviewed

Chen Xiao has many years of rich experience in factory management, but this experience also makes him sigh: "It has never been so severe before." ”

In fact, Chen Xiao has largely predicted the possible impact of the follow-up epidemic prevention work in advance, he coordinated some parts and components resources, and even prepared for "closed" production - deployed some logistics, materials, and a small number of employees have also taken the initiative to petition to stay in production, but later Chen Xiao did not really use this plan.

He felt that he was "not doing well enough." "There are some companies in the industry that are doing relatively well." Chen Xiao believes that judging whether it is good or not, on the one hand, is to see the final result, there are nearby factories that have been shut down until early April, on the other hand, it is to look at emergency response capabilities, and the speed of response to problems must keep up.

The result of his reflection is that more attention should be paid to the impact of the macro situation on the industry, such as the epidemic, whether it is necessary to fully consult the opinions of medical professionals in advance and formulate some corporate plans for its follow-up trend. In addition, the decision-making mechanism of enterprises should be more flexible, so that unexpected situations can be dealt with more quickly.

In terms of the layout of the supply chain, Chen Xiao proposed that perhaps it can be further "concentrated" in space. "It is a good way to build a supply chain cluster," he said, "and it can be seen that in this case, the suppliers are in the surrounding automakers, with stronger pressure resistance, and there are relatively few logistics and transportation across provinces." ”

In fact, China's automobile industry cluster has a certain regional distribution, East China, North China, Central China and other places have formed a relatively complete and mature industrial cluster, the enterprises in the region are interconnected and influence each other.

But this is also one of the reasons why Chen Xiao's factory has been greatly affected this time, and for enterprises whose supply chains are deeply dependent on the Yangtze River Delta region, this impact is difficult to avoid. By the same token, at the beginning of 2020, during the Wuhan epidemic, automobile manufacturing in central China was relatively more affected.

Chen Xiao mentioned that the arrangement of suppliers also needs to be reflected, and many in the current industry are still "one product and one point", that is, a part is only produced by one supplier, although individual companies are "one product and two points", but often in the same region, and after this time, the industry may think more about the supplier layout between different regions to reduce the uncertainty of future supply and production.

(The main character involved in this article, Chen Xiao, is a pseudonym)

This issue is edited by Feng Zhanpeng Intern Lin Xiying