EconomyFinancialFrom Toyota to Michelin: manufacturers warn of new disruptions...

From Toyota to Michelin: manufacturers warn of new disruptions in their factories

Russia’s invasion of Ukraine and COVID-19-related disruptions in China have forced carmakers from Toyota to Michelin to close plants and raise prices. Several manufacturers already warn that there will be more problems if the circumstances do not stabilize.

France’s Michelin , which was the first international tire maker to start manufacturing in Russia in 2004, has suspended production at its Davydovo plant, which employs about 750 people.

“There are a lot of supply difficulties, which means we have a disruption of financial flows, and there is a currency instability problem,” the tiremaker said in a statement. Michelin said its priority is to support the affected employees.

The list of Western companies that have suspended operations or withdrawn from Russia is growing by the day after the West imposed sanctions aimed at curbing Moscow’s access to finance.

Michelin and BMW were among the latest companies to warn on Wednesday of a disruption to their operations due to the Russian invasion of Ukraine.

BMW said that while it can still source some parts from western Ukraine and is contracting with alternative suppliers to maintain production, more disruptions are to be expected in the coming weeks.

German automaker BMW lowered its profit margin forecast on Wednesday.

A new outbreak of COVID-19 in China

China’s efforts to curb its biggest COVID-19 outbreak in two years have forced automakers Toyota and Volkswagen to suspend some operations, raising concerns about supply chain disruption.

Several Chinese provinces and cities have tightened restrictions in line with Beijing’s goal of suppressing contagion as soon as possible, including the tech hub of Shenzhen in southern China.

Shenzhen, the Chinese Silicon Valley, is carrying out massive tests after dozens of new local cases were registered. Authorities have suspended public transport and urged people to work from home this week as much as possible.

China has recorded more symptomatic local cases of COVID-19 so far this year than in all of 2021.

Among the Taiwanese companies that said they had suspended operations in Shenzhen were chip and printed circuit board substrate maker Unimicron Technology, which supplies Apple and Intel, and flexible printed circuit board maker Sunflex Technology.

Shenzhen’s Yantian International Container Terminal, one of China’s busiest ports, said in a WeChat statement that it was operating normally, although two companies with warehouses at the port said they had to temporarily suspend operations.

Other cities have enacted restrictions of various kinds. Authorities have locked down the city of Changchun, capital of the northeastern province of Jilin, closed schools in the financial hub of Shanghai and suspended public transport in the manufacturing hub of Dongguan.

Toyota said on Monday that its joint venture with China’s FAW group had suspended production in Changchun, although its operations in the city of Tianjin were not affected.

Volkswagen , which also has a joint venture with FAW, said it had suspended production at its vehicle and component plants from Monday to Wednesday.

With information from Reuters

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