More carmakers are feeling the effects of Russia's deadly invasion of Ukraine, with German auto giants Volkswagen, Porsche, and BMW struggling to get wire harnesses from their suppliers in the region.
This part is vital in building cars as wire harnesses are needed to organize miles of vehicle cables. However, production of this part has been curtailed, with suppliers such as Leoni, Fujikura, and Nexans shutting down operations in Western Ukraine as the Russian attack intensifies.
Supply chain issues are already emerging because of this development, with delivery bottlenecks hitting some assembly plants of the world's second-biggest automaker Volkswagen. Porsche's luxury division has already suspended production at its plant in Leipzig, while rival carmaker BMW has also been affected by the short supply of the wire harnesses.
BMW issued a statement regarding the supply chain problems affecting the company, saying that interruptions to their production will occur due to supply bottlenecks. BMW added that they are in intensive discussions with their suppliers to address the said issue.
A wire harness is crucial to BMW and all carmakers as vehicles cannot be built without them. This set of parts is vital because a wire harness helps manufacturers bundle up to 5 kilometers of cables in the average car neatly. Without the wire harness, the car's construction is a complete mess.
Wire harness supplier Leoni issued a statement saying the company is scrambling to compensate for production losses that were triggered by Russia's war of aggression against Ukraine. Leoni has two wire harness factories in Western Ukraine, with their plants in Stryi and Kolomyja, both facing production stoppages because of the conflict.
Leoni is not the only company doing wire harness business in Western Ukraine, with Germany's Prettl, SEBN, Kromberg & Schubert, Forschner, and Japan's Yazaki building a hefty production sector in this part of the world. A lower-cost, skilled workforce enticed these companies to set up wire harness production plants in Western Ukraine.
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Wire harnesses proved to be Ukraine's most critical automotive component that the country exported to the European Union back in 2020. Based on Comtrade data gathered by consultancy AlixPartners for that year, wire harnesses accounted for nearly 7 percent of all imports by the EU.
Figures from the Ukrainian government show that 22 automotive companies have invested more than $600 million in building 38 plants in the country. These firms, the bulk of which produce wire harnesses, employ over 60,000 Ukrainians.
The said plants are close to vehicle factories in Germany and the low-cost manufacturing facilities that German automakers, in particular, have built in the central European region. According to Sam Fiorani, the vice president of global vehicle forecasting at AutoForecast Solutions, carmakers will need to find alternative solutions for the short- and mid-terms to address this issue which won't go away anytime soon.
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