The Week – Volvo’s inter-continental solution

It has been a week in which the notion of our global interdependence and the benefits – or not – of approaches that reach across borders, have been challenged, again.

The auto industry, though, serves as a case study for the benefits of globalisation  – benefits flowing to consumers and workers – and it is nothing new. International manufacturing and selling has enabled the realisation of huge scale economies and lowered unit costs, which are also instrumental in creating low price points and viable demand. Accordingly, the biggest companies produce and sell in markets across the world and that global OEM footprint is underpinned by a complex web of international supply chains. You know all this, of course, but it is sometimes worth reminding ourselves of how much real economic progress has come about through growing international trade.

There were a couple of interesting reminders of that globalisation aspect to auto industry operations this week. One was in the problems that BMW encountered when a Bosch supplied component was hit by a supply issue on a sub-component produced by a firm in Italy. BMW factories in South Africa and China were impacted. Lean supply chains can, indeed, be vulnerable if any point in the chain experiences difficulties. And it looks like Bosch has found a solution: Just buy it.

Must say though, that my attention was really grabbed by a different example of globalisation at work. We already knew that Volvo Cars would be supplying world markets with the S90 from a plant in China. However, the real humdinger for me is the news that the cars for Europe are being transported by rail. It will be interesting to see how successful for freight shipments that long railway link becomes.

Also in the news this week, NEVS showed that while Saab has gone (its passing lamented by many), there is a sense that some part of it lives on in the ‘new 9-3’. It’s a kind of ‘second life’, perhaps.

Volkswagen also showed that it has some fancy new technology in lighting. Much less positive for the VW Group were developments in Germany regarding emissions cheating with Audi.

And the US market for May was, predictably, soft.

We also published some useful features – one on the increasing use of magnesium as a lightweight material and another on BMW’s new products strategy.

To return to the theme of globalisation, Daimler stressed the importance of its full supply chain impact in the USA. I am sure there were many reasons that Mercedes had for putting on a supplier jamboree like that one in the US this week, but I suspect that a big one would be to hope that Washington is listening.

Have a nice weekend.

Dave Leggett, Editor, just-auto.com