Reopening and rebuilding the automotive sector following COVID-19
How the Coronavirus pandemic has reframed the future of automotive and mobility
There is no doubt that the Coronavirus pandemic, and consequently the unprecedented closure of manufacturing plants across the world, has had a far-reaching impact on the global automotive economy. As lockdown restrictions begin to be tentatively eased throughout May and June, assembly plants and supply chain manufacturers are starting to reopen and rebuild their operations across the globe. This blog reflects on the impact of the pandemic, the challenges the sector faces in getting its workforce back to work safely in COVID-proofed facilities, the measures it needs to consider to secure resilient and robust supply chains, and the sustainable frameworks and practices it needs to adopt to ensure resilience as it moves forward through the recovery phase and beyond. It also highlights some of the mobility trends that have been accelerated due to consumer behaviour changes as a result of the global pandemic.
The current automotive and mobility landscape
Furlough, closure, consolidation and downward forecasts are sadly all common words and phrases used in conjunction with today’s global automotive sector. In the wake of the Coronavirus, production has slowed or stalled completely, and OEMs have had to rethink and reschedule new vehicle introductions as new vehicle demand almost halts.
And switching focus for a moment onto the automotive aftermarket, this segment of the sector has tended to fair reasonably well in previous economic downturns, with consumers opting to retain their existing vehicles rather than make a new purchase. However, the COVID-19 lockdowns imposed worldwide have impacted here too, with vehicle miles travelled and collisions drastically reduced. But, if China’s example holds true for the rest of the word, where consumers’ car usage levels have returned to pre-COVID-19 levels6, and in a climate where public transport is reduced or avoided, the easing of lockdown restrictions and opening of garages may conceivably result in a small upturn for the aftermarket, provided parts are readily available.
Rebooting automotive manufacturing safely
The automotive sector and broader global manufacturing sector face the same challenges. In the very early stages of recovery they will be focussing on how to make facilities COVID-proof and how to safely return its workforce back into the manufacturing environment.
Many manufacturers, including Ford2 have developed comprehensive manuals which detail new guidelines and practices relating to the cleaning and disinfecting of workstations and common areas, measures for increasing handwashing, the placement of hand sanitizers, temperature scanning on arrival, social distancing, the use of Personal Protective Equipment (PPE) including masks and face shields, and ramped up cleaning schedules. It also considers employee wellbeing, shining a light on the critical importance of demonstrating to employees that they are taking all the necessary precautions to reassure staff that measures are in place to keep them as safe as possible, and being on hand with advice on how to effectively manage stress and anxiety during these challenging times.
In France, in early May, a COVID-19 linked court order suspended production of a Renault plant3, stating that not enough had been done to protect workers against the virus. It’s clearly evident, now more so than ever, that health, safety, hygiene and wellbeing are firmly front and centre, for individuals, organizations and society as a whole.
And in addition to personal health and safety, equipment that has sat idle for weeks or months, will need to be serviced and checked for safe operation before manufacturing can resume. This, of course, all takes planning and time.
Navigating new supply chain models
It was reported in early May that component shortages led to Tesla suspending output at its China plant.4 Could this be a sign of things to come? Perhaps.
At the final stage of the supply chain however, Tesla’s Model 35 was the UK’s best-seller because it offered customers an online ordering system to enable contactless delivery, thereby enabling it to continue to do business in the most difficult of conditions. It’s likely we’ll see more evolution and innovation like this across the sector going forward. Adaptability is the name of the game.
Returning to the subject of supply chain disruption, we may see further parts shortages but also opportunities to rethink supply chain models, putting the sourcing of raw and assembled materials under the spotlight; including reassessing geographical diversity of supply chains to spread the risk away from a single region in case of further lockdown to minimize disruption to supply, reducing reliance on a single supplier, setting up early warning inventory systems to help anticipate and mitigate material shortages, and perhaps rethinking ‘just in time’ lean methodologies.
Information resilience and the risk of homeworking
Away from manufacturing, let’s not forget the back-office staff who may continue to work remotely from their homes during the recovery phase. Keeping information secure and IT systems and networks operating effectively during a disruption, such as the current pandemic, can be a challenge. Staff may be using home networks, opting for local storage if connections are slow and for many this is a whole new working style. So, it’s crucial not to forget these homeworkers too, who also play a critical role in keeping OEMs and the supply chain operating efficiently.
Disruption to future mobility trends
So, what’s the overall impact of all of this on the mobility environment? Whilst the uptake of ride-sharing and public transport has already decreased, and some players have delayed or revised their development plans, there are other segments of mobility that could enjoy unique growth opportunities as consumer habits evolve post-pandemic.
The sudden downturn in business for ride-hailing company, Uber, for example, has accelerated their Uber Eats food delivery plans7.
And a survey of 25,000 U.S. consumers published in early May by the IBM Institute for Business Value showed that more than 17 percent said they intend to use personal vehicles more following the Coronavirus pandemic, and around a quarter plan to use them as their exclusive mode of transportation in future. This, coupled with a decline in public transportation, would suggest we can expect to see more traffic on the roads than normal in the near future, leading to possible congestion and negative environmental impacts. But as mentioned earlier, this could also lead to business opportunity for the aftermarket and related supply chain.
Elsewhere in mobility, there has been renewed focus on contactless delivery during the pandemic, not only for medical and food supplies, but for the delivery of other goods too. So, it could be anticipated that advances in autonomous driving technologies for delivery devices accelerate in the new post-pandemic world.
The ‘next normal’
There is much discussion in the media of a new reality following the devastating impact of COVID-19. It’s unclear how long the recovery of the sector will take, but what’s certain is that the impacts will be long-lasting and far-reaching. Health and safety, resilient supply chains, business continuity practices, sustainability frameworks, and of course innovation, will all come under increasing focus and play a crucial role in rebuilding this great industry. BSI is committed to playing its role in this journey and has created a web page which brings together the various ways we can support your organization in these challenging times, whatever stage of recovery your organization is at. Our services range from standards to training, certification and consulting in areas such as IATF 16949, health and safety, workplace hygiene, PPE, supply chain, business continuity, risk management, information security, customised audits and more. Visit https://www.bsigroup.com/en-CA/topics/novel-coronavirus-covid-19/ to explore how we can help.
Join me for our live webinar on 11 June for more information on the impacts and future direction of the sector. Register your place now.
Robert Brown, Global Head of Automotive, BSI
About the author:
Robert is driving BSI’s strategy for the Automotive sector. In collaboration with leading industry bodies, such as the IATF group, Robert provides subject matter expertise and thought leadership on the latest innovations – from Connected Autonomous Vehicles (CAV) and electric charging points to steering the wider mobility agenda.
With over 25 years of industry experience, Robert is internationally recognized as an expert in Automotive Quality Management Systems and Lean manufacturing. This includes 6 years with SMMT deploying Lean Manufacturing in the Automotive Supply Chain and 12 years as IATF Oversight Manager, driving both implementation and management of the IATF 16949 Automotive scheme.
An international speaker, Robert inspires confidence and helps drive resilience throughout the automotive supply chain.
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References:
1 Global auto output could fall by 20% in 2020, Automotive News, 20 April
2 Return to work manufacturing playbook, ford.com, January 2020
3 Renault suspends production at French plant after a COVID-19 linked court order, Automotive News Europe, May 2020
4 Automakers Tesla abruptly suspends output at Shanghai plant report says, Automotive News Europe, May 2020
5 Tesla was UK’s best-selling brand in April, Automotive News Europe, May 2020
6 Beyond coronavirus: The road ahead for the automotive aftermarket, McKinsey, May 2020
7 More personal car trips, fewer shared rides post-COVID-19, survey finds, Shift Mobility Report, May 2020
