Date: Wednesday, April 20, 2022
Source: South China Morning Post
Several of Shanghai biggest manufacturers got off to a slow start in resuming work at their factories, as shortages of labour and vital parts after more than two weeks of a citywide shutdown left them lying idle.
At Tesla’s Gigafactory3 in Shanghai’s Lingang free-trade zone, workers could not resume their assembly of electric cars because they were waiting for battery packs to be delivered, according to two people familiar with the matter. The factory, idle since March 28, could lose about 50,000 Model 3 and Model Y vehicles in missed production, based on its installed daily capacity of 2,000 cars.
Elsewhere in Lingang, SAIC Motor had to dip into its inventory for components, scheduling only one shift of workers to churn out a few electric vehicles in a “stress test” of its production capacity, according to people familiar with the plan.
“The full restoration of the entire supply chain in the automotive industry cannot be completed until May if the lockdown [of Shanghai] is not lifted,” said Roy Wang, a senior manager with Shanghai Wings Supply Chain Management, a logistics company that transports and stores car parts. “Efforts to restart production do not only involve policymaking in Shanghai, but support from other parts of the country.”
SAIC Motor, which makes vehicles in China with General Motors and Volkswagen, is among the 666 companies approved by health authorities to resume production, albeit under a so-called closed loop system that requires workers to sleep on site, with zero contact with outsiders.
No factory can accommodate every worker, leaving most of the labour force stranded at home. Neither SAIC nor Tesla responded to requests for comment.
“The supply chain cannot be restored overnight,” said Peter Chen, an engineer with vehicle parts company ZF TRW in Shanghai. “A large number of workers are still sealed off at home and capacity will not be fully used until all the technicians and workers return to the plants.”
Shanghai SiMAT Microelectronics Technology, which makes semiconductor chip for BYD and Hua Hong Semiconductor, is applying for 35 workers to return to its factory floor. The additional staff would add to the 85 who had been sequestered on site since the beginning of April, taking the deployable workers to 120, or a quarter of its workforce, according to people familiar with the plan.
Elsewhere, companies are awaiting the green light from local authorities on their anti-pandemic plans before they are allowed to crank up their plants. SinoWealth Electronic, a semiconductor company, is still awaiting the government’ approvals, a representative said.
Shanghai’s daily additions of Covid-19 infections have topped 20,000 cases for 12 consecutive days, defying some of the most draconian isolation rules and almost daily mass tests. Concerned with lost production and struggling to tamp down seething public anger, authorities are kicking the restoration of economic order in China’s financial and commercial centre into high gear.
A key part of the strategy was to enforce a nationally recognised Covid-19 test pass for truck drivers to deliver raw materials, components, food and essential supplies between provinces without having to wait for results at every stop. Red tape over test results had gummed up the supply chain, and even led to the deaths of non-Covid patients who were deprived of medical care.
Chinese Vice-Premier Liu He ordered the creation of the nationwide test pass, and deployed additional passes for trucks to ply between Shanghai and the neighbouring cities of Suzhou and Hangzhou in the Yangtze River Delta, the heart of China’s economy.
The 666 companies cleared for work resumption are the backbone of Shanghai’s economy: the automobile industry in “China’s Motown,” which together make up 10 per cent of the national output, biomedicine, and semiconductor chip foundries.
Banks, fund managers and brokerages in China’s financial centre have arranged for staff and traders to work from home. The stock exchange and publicly traded funds ordered staff to sleep on-site, due to a regulatory requirement that bans transactions from being executed off-site.
Employees must be tested twice every day for Covid-19: a rapid antigen test in the morning, and a nucleic acid test every evening, according to the closed loop rules.
Truck drivers must test negative in nucleic acid tests 48 hours before being allowed to enter production zones, or be cleared in rapid antigen tests 24 hours before arrival.