Supply chain problems after floods in Slovenia

At the center of the supply gap at VW and its suppliers ZF and Schaeffler is an engine part from the Slovenian company KLS Ljubno. The company, which has 250 employees, was hit hard by the floods in the country at the beginning of August. KLS supplied the German automotive industry with, among other things, sprockets. Upon request, VW, ZF and Schaeffler each confirmed that they were affected by delivery bottlenecks at the company.

Sprockets are used in the drive train of internal combustion engines. This means that electric cars are exempt from the current problems. However, there are numerous restrictions and failures in combustion engine production at Volkswagen. The overview:

Shortage of parts after floods in Slovenia: VW can’t produce these cars now

• At the VW brand does it work? Main factory in Wolfsburg since this week in reduced shift operation. A spokesman told Handelsblatt that all four assembly lines were affected by the outages. But there is never a day on which the production lines come to a complete standstill.
  According to VW, the reduced operation applies for three weeks. The affected employees go on short-time work. The bestsellers, among other things, are made in Wolfsburg golf and Tiguan manufactured.

• In Emden will be the combustion engine models Passat and Arteon been produced in one shift instead of two since last week. From next week, however, production will be carried out in two shifts again.
• Also in Osnabruck According to VW, some shifts have been canceled since last week. Body construction and assembly are affected T Roc convertible as well as the final assembly of the Arteon Shooting Brake. The affected employees go on short-time work. Porsche production at the location is not affected. According to VW, the reduced production also applies here for three weeks.
• In Hanover Due to the supplier failure in Slovenia, “no combustion vehicles will be produced from mid-September to the beginning of October,” as a spokesman for VW Commercial Vehicles (VWN) announced. This means that the production of the Bulli model T6.1 gone, instead only the electric bus ID. Buzz and the plug-in version of the Multivan roll off the assembly line.
  In order to avoid short-time work, employees should be given further qualifications and given other jobs. The Polish VWN works in Poznań and Wrzesnia also produce only to a limited extent.
• With the premium brand Audi According to the company, this can happen with low-margin models A1 (Manufactured in Spanish Martorell), A3 and Q2 (Production in the main factory in Ingolstadt) there may be temporary production downtimes.
  There will be no production on an assembly line in Ingolstadt this week, as a spokeswoman explained. On another, production is only carried out in one shift. Production stopped in Martorell Audi and Seat after the Catalan national holiday on Monday also complete on Tuesday.

Skoda in the Czech Republic, VW in Portugal: The whole of Europe is feeling the shortage of parts from Slovenia

Production cuts due to the shortage of parts are also being felt at the group’s other European locations.

• At Skoda were at the headquarters in Mlada Boleslav near Prague Shifts removed from production schedule. The combustion engine models are manufactured in the company’s largest factory Fabia, Scala, Octavia and Kamiq manufactured. At the location Kvasinywhere, among other things, the upper middle class car Superb is being produced, the production lines have come to a complete standstill this week.
• The VW factory in Palmela near Lisbon had already announced some time ago that it would stop assembly for up to two months from mid-September. At the location the VW compact car T Roc manufactured.

The parts shortage hits Volkswagen at a time when demand is already weakening. CEO Oliver Blume had to scale down his goals slightly for the first half of the year. Between nine and 9.5 million vehicles are expected to be delivered to customers in 2023. So far, the Wolfsburg-based company had assumed around 9.5 million units, after 8.3 million in the previous year.

While the industry has recently been concerned about the low demand for electric cars, combustion engine models are now also being affected, which are generally more profitable than their electric counterparts.

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The decisive factor will be when operations at KLS in Slovenia start up again, how quickly they ramp up and how quickly alternatives emerge. The supplier Schaeffler says that it basically follows “a multiple sourcing strategy” – there is already an alternative supplier. According to a spokesman, ZF also “currently assumes that the resulting backlogs can be made up from the week after next.”

VW manager: Problems will be over “at the end of the year”.

Industry sources say that KLS Ljubno had produced around 100,000 sprockets in the week before the flood, which is considered a lot. Experts are therefore skeptical as to whether car manufacturers can change their supply chains so quickly. “The tense situation is likely to continue until the end of the year, perhaps even beyond,” estimates Mirko Woitzik, manager at the analysis service Everstream.

There are currently around 100 VW employees from Salzgitter, Hanover and Skoda in Slovenia to get the supplier business up and running again. The search for alternatives is also progressing, it is said.

Purchasing director Dirk Große-Loheide appeared confident last week: By the end of September, he announced on the sidelines of the IAA Mobility motor show in Munich that we would have a plan for how things should proceed. “At the end of the year the issue was resolved.”

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