Small Scale Production Of Hubei'S Automobile Industry: It Still Takes Time For The Industry Chain To Restore "Vitality".

In March 12th, Dongfeng Group headquarters, located in Wuhan economic and Technological Development Zone, remained quiet. Occasionally, pedestrians pass through the patter of spring rain. When the door is closed, it can clearly hear the sound of wind blowing down leaves and birds.

Although the group headquarters has not resumed normal business, the factories of Dongfeng Group are already preparing for the resumption of work.

In the Wuhan economic and Technological Development Zone, in twenty-first Century, economic news reporters could occasionally see some Dongfeng employees wearing grey workshops on their bicycles on the road. And Dongfeng Honda first factory, Dongfeng Honda second factory, Dongfeng Fengshen Wuhan factory, Dongfeng mould stamping company and many other Dongfeng Department companies, a small number of employees in and out.

In March 12th, the China Automotive Industry Association said at a monthly information conference that the 23 enterprises closely followed up the annual sales volume of more than 96%. In March 11th, the return rate was 90.1%, and the staff returning rate was 77%. Of the 23 vehicle companies surveyed, as of March 11th, 18 of them had been reopened, and the Dongfeng Motor Group in Hubei has returned to 50% as of March 11th. Due to traffic control reasons, most of the staff coming back from Hubei are local.

Data show that in 2018, Hubei automobile production was 2 million 418 thousand and 700, ranking fourth in the country, accounting for 8.7%. Among them, the most concentrated production capacity in Wuhan, gathered more than 1200 cars and parts manufacturers. Wuhan is the base of Dongfeng Motor Group. Most of its capacity is concentrated here. In addition, SAIC has a factory in Wuhan, and BOSCH, Valeo, Delphi, Visteon and other national component giants also have factories or R & D centers in Wuhan.

Taking the Dongfeng Automobile Group as the core, the supply chain system of Hubei automotive industry is waiting to be restarted. However, in twenty-first Century, the economic report reporter learned that the current stage of resumption is mainly based on small-scale production.

The automobile manufacturing industry is a resource intensive enterprise with a very long industrial chain. At present, the prevention and control pressure of the new crown pneumonia epidemic is still grim. Hubei's auto industry needs to overcome many difficulties to restore large-scale production and industrial chain system to normal.

Dongfeng Group headquarters. Data map

Vehicle manufacturers prepare small batch production

According to the statistics in 2018, the Wuhan economic and Technological Development Zone with Zhuankou as its core has contributed 1/4 of Wuhan's GDP, while the automobile industry has contributed 80% of GDP in Wuhan's economic and Technological Development Zone, that is to say, the automobile industry has contributed more than 20% of Wuhan's GDP, and has become the largest single industry in Wuhan's GDP share.

At the same time, more than half of Dongfeng's 160 thousand employees work in Wuhan, accounting for more than 1000 related parts enterprises, behind which are hundreds of thousands of jobs and huge fiscal revenue. In addition to Wuhan, Shiyan and Xiangyang also gathered a number of vehicle and parts companies. The automobile manufacturing industry is one of the pillar industries in Wuhan and even Hubei. Long term suspension of operations will make the relevant enterprises in the increasingly fierce competition in the automotive market in a passive position.

In March 10th, the economic report reporters learned from a number of local car dealers in Wuhan in March 10th that part of the automobile and parts manufacturers in Wuhan are actively preparing to return to work.

According to a document entitled "approval of the approval of Honda Dongfeng Honda Co., Ltd. and its suppliers", the economic news reporter showed that "according to the opinions of the new crown pneumonia epidemic prevention and control headquarters, the suppliers of your company and our region are now in a phased order to resume production." The document covers the official seal of the new crown pneumonia epidemic prevention command headquarters of Wuhan economic and Technological Development Zone (Hannan District). The date of issue is March 9, 2020.

It is mentioned in the document that the requirements for epidemic prevention and control in provinces, municipalities and districts must be strictly implemented and strict responsibility for epidemic prevention and control should be strictly implemented.

In twenty-first Century, the economic news reporter learned from Dongfeng Honda's stakeholders that "the company will only prepare for local work and production in small batches according to the requirements of the government." The source said that it was unclear the specific arrangements for the resumption of work.

Dongfeng Honda has three factories in Wuhan, with annual capacity of 120 thousand, 240 thousand and 240 thousand respectively, with a total capacity of 600 thousand. In recent years, Dongfeng Honda has been on the rise in China. In the past two years, although China's automobile market is going downhill, Dongfeng Honda's sales volume has steadily increased. It is also one of the most influential automobile companies affected by the epidemic.

In March 12th, in twenty-first Century, the economic report reporters saw in Dongfeng Honda second factory that part of its suppliers had already worked in the workshop, and there were freight cars in the park. One employee told reporters that this is preparing for subsequent production, but it is not clear at present that all workshops in vehicle production are resumed.

In addition to Dongfeng Honda, twenty-first Century economic report reporter learned that Dongfeng passenger car and some Dongfeng Department Parts Company is also preparing for resuming work.

However, Shenlong Automobile and SAIC GM related sources told reporters that the factory in Wuhan has not yet received relevant notice. Shenlong Automobile has four factories in China, three factories are located in Wuhan, a factory is located in Chengdu, four factories have not returned to work. A Shenlong Auto insider told reporters that an important reason for the failure of the Shenlong Automobile factory in Chengdu is that the supply system of many parts is located in Wuhan. If the relevant factories in Wuhan are not fully prepared, the actual significance of the resumption of the factory in Chengdu is of little significance.

In addition, a senior member of a multinational component company with spare parts factories in Wuhan also revealed to reporters that its factories in Wuhan could basically resume work within this week. "However, each factory has a limit of 50 people, so it must be a small scale." The source said.

All of the above related enterprises resumed their working hours within this week.

In addition to the large vehicle companies and international parts companies, there are also a large number of upstream suppliers in Hubei Province, such as seat belts, bolts, pedals, door handles, and other low technology accessories. These companies tend to be small in size, ranging from dozens to hundreds of employees. A local component small business who produces fuel tank valves told the twenty-first Century economic report that no notice of resumption has yet been received.

Compared with Wuhan, the pressure from Shiyan and Xiangyang will be smaller and the preparation time will be earlier.

In Shiyan, Dongfeng company said that from March 6th to 8, the company has arranged for 104 cars to return more than 1600 employees in Fangxian, Zhushan, Zhuxi, Danjiangkou and Yunxi to Shiyan city proper, and make preparations for resuming work and re production in an orderly way. In fact, during the epidemic period, Dongfeng commercial vehicle company started small-scale production and emergency supply of epidemic prevention vehicles.

Nissan also told the twenty-first Century economic report that Dongfeng Nissan's factory in Xiangyang also plans to resume production within this week. The recovery of capacity will be adjusted according to the actual supply chain and reemployment staff. Dongfeng Nissan Xiangyang plant mainly produces Teana, Kroraina and Infiniti brands.

It still takes time to fully resume work.

Although a small number of vehicle manufacturers in Hubei are now preparing for a small batch to resume work, it still takes time for the Hubei auto industry to regain its "vitality". Compared with other enterprises in other parts of China, Hubei car enterprises are facing more severe challenges.

"I feel that it is not very long to get ready to return to work, and maybe a few cars will be laid off, because most enterprises have spare parts reserves. But achieving large-scale production and returning to the original production lot is very difficult. Because it is difficult for people to be in place, a workshop can actually produce 2000 people, but now there are only seven hundred or eight hundred people. The original three class production or two shifts can only be produced in one class, so the production efficiency is much lower in all aspects. There is still a long way to reach the normal state of reproduction. On March 12th, Cui Dongshu, Secretary General of the National Federation of Hong Kong Federation of trade unions, said in an interview with the twenty-first Century economic report reporter.

At present, although the epidemic situation in Hubei is under control, it can not be taken lightly. Cui Dongshu believes that the current stage of resumption of production is mainly a careful, careful and gradual recovery of production preparation.

China Automotive association data show that in February this year, affected by the epidemic, China's automobile production and sales fell by 79.8% and 79.1% respectively. All car companies have encountered tremendous impact.

"Affected by the epidemic, consumer demand is insufficient or even not, the domestic industry chain supply system has not yet fully recovered, enterprises due to slow progress, spare parts supply and other problems leading to low output level, February production and marketing bottomed out." Xu Haidong, deputy chief engineer of China Automotive Association, said in an interview with the twenty-first Century economic report reporter.

However, the China Automobile Association said that from the monitoring data of the first 10 days of the domestic key enterprises in March, although the production and sales fell by 50%, the decline in production and sales in February has been significantly improved.

At present, the purchasing power of consumers is insufficient, but enterprises and distributors are facing enormous pressure of cash flow. In the terminal market, some car companies have launched different price promotions.

However, for the Hubei automobile company represented by Dongfeng Honda, the terminal stock is insufficient, and it can not be resumed. Whether it is for the enterprise itself, or its dealer system in the country will cause a huge impact.

"The competition in the automotive market is very fierce. In the same market, consumers can choose a lot. If they do not return to work for a long time, they may lose part of the market share. They also need to rush to resume production, otherwise, if the dealer falls down, it will be even later and will hurt the business. " Cui Dongshu told reporters.

In addition to the market share of the automobile factory being taken away by competitors, the long stagnation of enterprises will also hurt the supply chain system of enterprises. Especially the local small and medium-sized parts suppliers enterprises, the survival environment is more embarrassed.

An auto industry source told reporters that Dongfeng's own parts and components system will be hit, but the epidemic will gradually resume after the end of the epidemic. TNCs rely on the layout of globalization and can be dispatched. If China is out of stock, it may transfer goods from Southeast Asia, or through other factories, it is relatively flexible. But for some small and medium-sized parts enterprises in Hubei, the blow is fatal.

Generally speaking, the host plant will choose several suppliers to ensure the flexibility of the supply chain and to lower the cost. If A point supplier is unable to supply, there is possibility of selecting B point and C point supplier. Twenty-first Century economic report reporter learned that, by the production and supply, logistics and other links, many car companies have replaced some parts suppliers. Among them, the most affected part is Hubei's parts enterprises.

"Car companies should check their own supply chain system before resuming production. At this time, they will bring Hubei enterprises to the rear and take other enterprises to the front, which will definitely bring adverse effects on the development of Hubei enterprises. Those upstream parts with low cost, low technology content and low transfer cost may be replaced quickly. If you want to come back in the future, you may need lower costs and lower prices. Cui Dongshu said.

(Intern Song Doudou contributed to this article).

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