Is Supply Chain Disruption Under coronavirus Impacted on The Automotive Market In The Die And Mold Industry in America?
A coronavirus pandemic coupled with a continued global crude oil price war; crude oil fell as much as 26%. Transportation-related industries such as airlines, automobiles, and cruise lines have also been hit hard, and global demand has continued to decline. We put together the big things that happened this week. Please check it out.
Gov. Gavin Newsom of California Orders Californians to Stay at Home
"No one in California can go out unless necessary!" California Governor Gavin Newson (Democrats) formally issued a "Home Restriction Order" on "California" on Thursday evening. The state's 40 million residents are not allowed to go out and strictly prohibit the indoor grouping of more than 10 people. Governor Newson emphasized that the state-wide access blockade in California is due to the rapid spread of the pneumonia epidemic in Wuhan across the United States. In the past 48 hours, not only the number of cases in the United States has broken 10,000, but the cumulative diagnosis has increased by 252%. The United States is the third most severe area after New York and Washington. Therefore, to "stop the epidemic from running out of control," California's statewide ban will also be implemented "indefinitely" depending on the epidemic.
Oil plummets 26% to 18-year low as global price war escalates
Oil prices plunged yet again on Wednesday, shedding as much as 26% and falling to an 18-year low. The losses came as the resource battles a coronavirus-driven demand slowdown, as well as the continued escalation of a global price war between Saudi Arabia and Russia.
West Texas Intermediate crude fell as much as 26%, to $20.06 per barrel. Brent crude, the international benchmark, fell more than 14%, to $24.52 per barrel at intraday lows.
The commodity has slumped — shedding as much as 51% this month alone — during the coronavirus pandemic. Global demand has taken a hit amid a wave of canceled trips for airlines and cruise ships. The outbreak also sparked a global price war between OPEC and its allies as they could not agree on further production cuts.
“The last two price collapses both never hit prices we’re seeing today,” said Kevin Birn, an oil sector analyst at IHS Markit, adding, “I don’t think we’ve seen the full brunt of what may come — overall, global demand is still probably going to fall.”
Birn described the situation as maiden territory for the industry, where a surplus of oil is likely to build up quickly. But because of COVID-19, there’s little certainty about what future demand will look like and how that surplus will affect future production.
“What we’re dealing with now is a surplus and potential stock build, which is unprecedented,” he said.
This week, we have seen many major events affecting the international community, and we have a deep understanding of the impact of the COVID-19 on the global economy. Next, we will discuss whether the American automotive mold market will undergo significant changes. Find out possibilities.
Impact of COVID-19 ripples through the automotive sector in the die and mold industry
Southwestern Ontario’s automotive supply chain remains healthy despite the disruption of COVID-19, but industry officials are keeping a watchful eye on a border that’s growing increasingly tighter.
Monday Prime Minister Justin Trudeau closed Canada’s border to everyone who is not a citizen or permanent resident with an exception for Americans. Diplomats and flight crews are also exempted.
There will be no restrictions on trade and commerce, though only four airports (Montreal, Toronto, Calgary, Vancouver) will be open for the U.S. and other international flights.
“With the supply chain in North America so tightly integrated, it would be a disaster if the border was closed (completely),” Canadian Association of Mold Makers president Mike Bilton said.
“It wouldn’t mean the industry would shut down in a matter of days, it would likely be only hours. I think that’ll be the last thing they’ll consider doing.”
According to the WindsorEssex Economic Development Corporation, 40 percent of two-way trade between Ontario and the U.S. and a quarter of Canada-U.S. trade, cross the Windsor-Detroit border.
Automotive Parts Manufacturers Association president Flavio Volpe applauded the federal government for keeping trade flowing and recognizing the ‘special relationship with the U.S.’ by exempting American citizens and flights.
“This is a delicate situation at a critical time,” Volpe said.
“The cost of banning U.S. citizens could’ve been access to goods and medical supplies we could only get from the U.S. We know the ethic and discipline the U.S. healthcare system will put into quarantining this virus will be at least equal to Canada.”
Volpe said a real danger to the supply chain is if the car market crashes as it did in China and now Europe.
“We’re not there yet, but we’re monitoring the situation closely,” Volpe said.
Bilton said no plant, other than the 24-hour shutdown at FCA’s Windsor Assembly last week, has been idled for COVID-19 related reasons.
“In the short term, I don’t see any plant closures or dropped shifts. They (automakers) are going to build cars as long as they can.”
Bilton said the Tier I suppliers will be the first to feel the impact if the automakers begin closing plants like they’re doing in Europe.
FCA has shut its European plants and PSA has followed suit. Ford has announced it’s idling its plant in Valencia, Spain and Ferrari have shut up shop for two weeks.
North America hasn’t been entirely immune to Volkswagen closing its Chattanooga, Tenn. plant.
FCA Canada’s head of communications Lou Ann Gosselin said the COVID-19 crisis hasn’t altered the company’s production plans for Windsor Assembly.
“Regular production continues at the Windsor Assembly Plant,” Gosselin said.
“We continue to monitor the situation carefully and take precautions to safeguard the health and welfare of the FCA family.”
Bilton said for the many tools and die and mold-making firms in southern Ontario, their business isn’t as reactive to an automaker’s short-term plans as Tier I partners.
“For tool and die shops, projects take 20-35 weeks to complete, so they wouldn’t be hurt as immediately,” Bilton said.
“The orders are in and we’re in mid-cycle making tools and molds. That’ll continue.”
The bigger concern for companies is keeping their employees healthy.
Automate Canada chair Shelley Fellows said firms are already introducing several protocols aimed at protecting employees from COVID-19.
Spacing between workers on the plant floor has been increased where possible and the APMA has created a platform listing best practices for its membership.
“There are restrictions on visitors (to plants) and meeting customers face-to-face,” Fellows said.
“Alternatives using electronics and holding digital meetings are being encouraged.”
Companies are banning travel, encouraging self-screening if employees have traveled and self-isolation.
Manufacturing facilities are also being sanitized more vigorously, especially shared surfaces. Employees are being encouraged to work from home if possible.
Based on the above observations, the company will continue to carefully monitor the situation and take precautionary measures to face COVID-19. For many tools and mold manufacturing companies, their business projects do not respond to the short-term plans of automakers like Tier 1 partners. For mold shops, the project takes 20-35 weeks to complete, so it will not Get hurt immediately. At present, the company is most concerned about maintaining the health of its employees and coping with the difficult times of the global community.