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Ukraine War Stops Supply of Parts for German Car Makers

March 28, 2022 (EIRNS)—The automobile sector of German industry is affected heavily by the war-related collapse of Ukrainian-made parts. The situation is said to be “catastrophic” by some carmaking experts already. Never in the post-war period—not even during the oil crises and Sunday driving bans—has the entire industry, across the entire value chain, been as close to collective collapse as it is at present.

For instance the wire harness: In a car it is something like the central nervous system. Without it, nothing works. The cause is a shortage of materials on an unprecedented scale—the focus is on wire harnesses from Ukraine—and in part also a shortage of rare raw materials such as the noble gas neon. While the latter gap may still seem somehow bridgeable, the ongoing disruption in the supply of wire harnesses is leading to a unique threat to the entire automotive value chain in this country. Growth forecasts for the entire economy have already been drastically reduced.

Wire harnesses from Ukraine are currently indispensable for German car production. The situation is much more explosive than in the previous year, when increasing supply bottlenecks from Asia for memory chips, which are also strategically important, led to temporary interruptions in production and even to temporary plant closures and short-time working. But these were only supply bottlenecks, not total supply failures, as is currently becoming apparent in the case of cable harnesses from Ukraine. This impending total failure affects the substance of the industry, because harnesses are not standard goods, but manufacturer- and model-specific, tailor-made to customer requirements. Moreover, wire harnesses cannot be retrofitted: If not available, cars cannot be built and the entire value chain comes to a standstill.

According to surveys, alternative procurement sources are not open to any German manufacturer in the short term. Even if wire harnesses could be manufactured outside Ukraine, capacities would not be sufficient. According to reports, the German automotive industry as a whole sources 80% of its wire harnesses from Ukraine, with individual manufacturers sourcing as much as 100%. The reason: In recent years, the entire wire harness production was withdrawn from North Africa and relocated to Ukraine because of the low hourly wages of about €2 on average. A regional relocation back in the short term is out of the question.

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