The car industry is particularly vulnerable to supply chain disruptions. Its fine-tuned logistics are designed to keep storage times to only between 1 and 2 months. The push into electric cars has added to complexity, because production of battery cells requires a steady flow of materials like lithium and cobalt.

Germany’s Schaeffler Group, which employs 87,000 worldwide and is a major supplier to car makers, joined peers on Thursday in hammering out emergency plans to cut capacity in Europe and avoid layoffs. Those include reducing working hours and cutting production on certain days.

“As we have to reduce production in our plants in the light of the crisis, it was important to us that flexible solutions be quickly established,” said Juergen Wechsler, who represents Schaeffler workers for union IG Metall.

Liqui Moly GmbH, a maker of engine oil and lubricants based in the southern German city of Ulm, is suffering dramatic order declines. “If the situation demands it, I will forgo my salary,” Chairman Ernst Prost said.

Detroit Shutdown
Anton Posner, chief executive officer of supply-chain management and consulting company Mercury Resources, said the move by General Motors Co., Ford Motor Co., and Fiat Chrysler Automobiles NV to temporarily shut down their U.S. plants will reverberate not only through their suppliers of finished parts but in steel, aluminum and transportation.

“We have ships loading steel in Europe next week headed for the U.S., but will there be shipments beyond that with industry shutting down?” he asked. “Who’s going to hold inventory if there’s no consumption?”

U.S. steelmaker Commercial Metals says it’s still at work and facing postponements, not yet cancellations. “So all these jobs are going to come back,” said CEO Barbara Smith.

She hasn’t had any employees infected. But as a company heavily dependent on infrastructure and other construction projects, she is also worried about job sites being shut down due to infections. All of that has left an enormous cloud of uncertainty hanging over her business, even as she continues to book contracts, like one on Thursday related to a highway expansion in Dallas.

“How can I give guidance when I don’t know how long it’s going to last or what all the ripple effects will be?” she asked. “I think it’s irresponsible for anyone to make assumptions right now.”

 

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