Automakers are facing yet another production setback in China as the country deals with its largest outbreak of Covid-19 in two years. The work stoppages are affecting both Volkswagen and Toyota as well as suppliers like Foxconn.
So far in 2022, China has reported more local symptomatic cases of Covid-19 than it had in all of 2021, reports Reuters, and that is leading to tightening restrictions in multiple provinces and cities. The country operates a zero-tolerance goal of suppressing the contagion as quickly as possible.
That has caused factories around the country to pause production. That includes both Toyota’s and Volkswagen’s joint ventures with the FAW Group that are located in Changchun. Toyota’s operations in Tianjin city, meanwhile, remain unaffected.
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Foxconn, which works with Stellantis and Apple, has had to shut down it and its subsidiaries’ operations in Shenzen for the first half of this week. An unnamed source from that company, though, said that companies would be allowed to work if they could create a “closed management” system in which employees would live and work in a bubble, as they did for the Beijing Winter Olympics.
Factory owners warn that the impact of these stoppages will last much longer than the shuttering itself, as factories work through the backlog. At least one of China’s major ports, meanwhile, said it would be operating at maximum capacity, though two companies that have warehouses there have said that they would be temporarily suspending operations.
Supply chain concerns are particularly acute for automakers this year. Having weathered the pandemic-related work stoppages of 2020 and the supply chain woes of 2021, they now face fresh supply disruptions not just from this latest wave of the pandemic but from Russia’s invasion of Ukraine, which could lead to further semiconductor chip shortages.
