Renault Samsung to shut down factory over virus
In this Feb. 4, file photo, a worker walks among beds in a convention center that has been converted into a temporary hospital in Wuhan in central China's Hubei Province. AP-Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
As the coronavirus spreads, Renault Samsung is considering halting operations in Korea for three days starting Feb. 11 due to a disruption in supply chain management, industry sources direct with the knowledge said.
“Once the procurement of wiring from Chinese suppliers is resumed, Renault Samsung will re-start operations. The company plans to shut down a factory in Korea for two or three days starting Feb. 11,” the sources said, adding additional plans will be decided on after analyzing the scale, duration and geographic spread of the virus outbreak.
The possible plan came a day after South Korea's top carmaker Hyundai Motor and its sister company Kia Motors decided to shut down their operations in South Korea, as they weren't receiving critical wiring components that are made in China.
General Motors Korea said it doesn't plan to close its operations, stressing that the company's manufacturing facilities will remain operational until the end of this week as wire inventories, considered to be a key component for use in vehicles, aren't that limited.
As of Feb. 3, at least 25 provinces, municipalities and other regions in China have told businesses not to “resume work before Feb. 10,” at the earliest. According to the guideline, some auto manufacturers in China have asked employees to work from home if they are able to, while others continue to extend the holiday shutdown for operations across the country.
Key concerns are that other components will soon be in “tight supply.” Bosch, the world's top-tier vehicle parts supplier, recently told reporters, while there had been “no disruptions” thus far, if the virus outbreak continues, then “supply chains will be disrupted.”
“We might expect the potential of a China-wide supply chain disruption caused by parts shortages from Hubei, a major component hub, and adjacent province closures for the majority of the month of February as a result,” a market research firm IHS said in a release.
It's too early to say whether leading Korean or foreign carmakers which have operations in Korea, as well as in China, will have extended plant shutdowns. But such a possibility remains, according to analysts.
The last time China experienced economic setbacks was during the SARS outbreak in 2003. However, that happened nearly two decades ago and China, at that time, didn't have the large-scale global impact it has today on most industries, including the automotive sector.
China's auto factories produced 1.1 million passenger vehicles when the SARS epidemic erupted, killing 349 people in China, data from the International Organization of Motor Vehicle Manufacturers showed. That is a far cry from the 23.5 million vehicles that are produced today, according to the group.
Officials of the local automotive industry said they've been told by major parts suppliers that they will have to abide by the Chinese government's recommendations on resuming operations.