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The spread of the novel coronavirus has prompted Chinese automobile parts factories to extend their suspension of operations, throwing a wrench in the production of South Korean automakers. As their supply of Chinese-manufactured parts dwindles, Hyundai Motor Company and Kia Motors first slowed down production and are now planning to halt work at some of their domestic production lines. Ssangyong Motor Company has decided to suspend operations beginning Feb. 4. LG Electronics and other South Korean electronics firms have halted operations at their factories in China or temporarily closed retail outlets there.

Hyundai and Kia announced on Feb. 3 that they’re planning to halt some of their production lines this week because they’re running low on Chinese-produced wiring harness, a bundle of cables used in their automobiles’ electrical systems. The problem is that primary suppliers of this part, such as Kyungshin and Yura, have had to extend a work stoppage at their Chinese plants. Hyundai canceled overtime work planned for this past weekend on the production line of its Palisade SUV, and Kia has started adjusting the pace of production by reducing vehicle output at plants in Hwaseong and Gwangju.

“The interruption in the production of Chinese parts has created an emergency that forces us to suspend operations. But given the differences in the parts remaining at each factory and assembly line, the manner and timing of this suspension may vary,” Hyundai CEO Ha Eon-tae wrote on the company message board on Monday.

The wiring harness is one of the first parts installed during the assembly of an automobile. The wires are attached to the bottom of the car and then the other parts are placed above that. Since the wiring varies according to car type and model, automakers generally have parts manufacturers supply one week’s worth of parts depending on the work that’s underway. Running low on this part makes it difficult to keep the conveyor belt rolling.

South Korean companies have typically relied on China for their supply of parts that are less technically demanding in an attempt to reduce labor and material costs. Following the adoption of the just-in-time manufacturing method, which seeks to only use those parts necessary at any given time, companies have only been stockpiling between four days’ and a week’s worth of parts. So when the timely supply of parts is interrupted, as under the current circumstances, it causes a cascade of domestic factories suspending their operations.

Ssangyong Motor announced previously that it’s suspending operations at its Pyeongtaek Factory from Feb. 4 to 12 because of issues with its supply of parts from China. Ssangyong has found it difficult to acquire parts since Leoni Wiring Systems Korea, which manufactures and supplies wiring harnesses to South Korean automakers, halted operations at its factory in the Chinese city of Yantai through Feb. 9, on the recommendation of the Chinese government. “The date of our resumption of production could change depending on the situation on the ground in China,” a company spokesperson said.

In addition to Ssangyong Motor, Leoni Wiring Systems Korea reportedly also supplies wiring to GM Korea and Renault Samsung Motors. However, GM Korea and Renault Samsung have apparently managed to limit disruption by sourcing parts from other global companies through their parent firms, General Motors and Renault-Nissan-Mitsubishi Alliance. “There hasn’t been an immediate impact on production, but we’re looking into the impact that would result if this situation is prolonged,” a Renault Samsung executive said.

Electronics firms are also struggling to deal with the coronavirus outbreak. LG Electronics, LG Chem, and LG Display have completely halted operations at their Chinese factories. During the initial phase of the outbreak, they’d tried to keep their factories running with a skeleton crew, but as the disease spread, they opted for a full shutdown. These companies operate factories in Nanjing, Beijing, Guangzhou, and Tianjin. On Monday, Samsung Electronics announced it would be keeping its flagship store in Shanghai closed until Feb. 9. The outlet, which was launched in October 2019, is the company’s first mobile flagship store in China.

By Hong Dae-sun, staff reporter

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