by Freedonia Industry Studies
April 21, 2020
US automobile manufacturers have quickly altered their operations due to COVID-19. Many firms adjusted to slumping new car sales by slowing down assembly lines or ceasing production altogether, while other manufacturers have worked to re-tool production to make ventilators and other needed medical equipment. This contraction of automobile production activity has affected hundreds of companies across the US.
Suppliers of automobile parts and components have been hard hit as orders for their products have dried up. Given that – in many cases – these suppliers rely on subcontractors with the parts needed to put together steering, axle, chassis, and the other assemblies, the shutdown of a single plant can ripple down to multiple other businesses.
Furthermore, this drop in orders will affect those companies that provide raw materials to the industry. Getting beyond the more obvious metals used to produce modern automobiles, such as steel and aluminum, a wide range of other inputs is also required, such as plastic resins, rubber (not only for tires but for acoustical and vibration control), composites (e.g., fiberglass and carbon fibers), coated fabrics (for upholstery, headlining, air bags, etc.), and glass.
Some of those materials – including plastics and coated fabrics – can be reposed into needed personal protective equipment and some plastics, gaskets, and other items will be used for ventilators. However, a prolonged shutdown of the nation’s automobile production capacity would still have dire effects cascading through to parts suppliers and firms that provide key raw materials.
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