Automotive supply chains face ongoing disruption
The automotive parts market has long contended with interruptions across the globe. In Europe, reports from German media highlight a shortage of wiring harnesses, assembled cables, connectors, and related electronic components. A recent assessment by AlixPartners indicates that approximately 7 percent of the electrical wiring for car factories in the European Union is produced in Ukraine. LBBW analyst Frank Biller warns of a potential worst case scenario in which Europe could see production losses reaching as many as 650,000 vehicles, equating to about four percent of output.
Why was Ukraine chosen for electrical wiring production?
Ukraine has been attractive to car suppliers as a cost-effective location for organizing wiring production. Wages are comparatively low, yet the region remains in proximity to major manufacturing hubs in Germany, Poland, Romania, and Slovakia. The cable assembly process often remains manual, partly because widespread industry standards are still developing, which has led to the creation of an expansive network of assembly sites in eastern Europe and North Africa. In eastern Europe there are roughly 150 sites, and in North Africa about 50 sites used for wiring operations.
Since 1998, foreign investors have poured around 600 million U.S. dollars into building 38 production facilities in western Ukraine. The scope of activity across the region underscores the importance of Ukraine as a key component supply hub for wiring systems in the global automotive sector, a view supported by AlixPartners who note that nearly all of the top ten wiring harness manufacturers operate at least one assembly site in Ukraine.
What is the core problem and what solutions are available?
Today, modern cars rely on hundreds of wires and countless contact points within a wiring harness. The total weight of wiring for a single vehicle exceeds 50 kilograms. Without a steady supply of harnesses, production lines at major manufacturers such as BMW, Volkswagen, and Porsche can grind to a halt. Stocks of wiring harnesses are typically limited because these components are made to order for specific vehicle configurations, leaving little room for significant stockpiling.
Germany, in particular, depends heavily on wiring harnesses and their components produced in Ukraine. Supply chains routed through North Africa often serve other regions and countries in Europe, ensuring deliveries reach Italy, France, and the United Kingdom with different logistical considerations.
Experts suggest the only viable response to the current crisis in automotive wiring is to swiftly relocate production or assembly of cables to alternative countries. While the transition involves notable costs and can take three to six months, the larger hurdles include labor availability, staff training, and relocating assembly and testing equipment to new sites. The emphasis is on minimizing downtime and maintaining the integrity of the wiring systems that power modern vehicles.