Tesla Inc yesterday operated its Shanghai plant well below capacity, showing the problems factories there face trying to ramp up output under a tightening COVID-19 lockdown, while Beijing kept fighting a small, but elusive outbreak.
Many of the hundreds of companies reopening factories in Shanghai in the past few weeks have faced challenges getting production lines back up to speed while keeping workers on-site in a “closed loop” system.
Even if they get everything right, such firms depend on suppliers facing similar challenges.
The latest sign of struggle with increasing output under COVID-19 rules came from Tesla’s Shanghai plant, whose resumption three weeks ago received generous coverage in state media as an example of what can still be achieved despite restrictions.
The US automaker has halted most of its production at the plant due to problems securing parts, an internal memo seen by reporters showed.
Tesla had planned as late as last week to increase output to pre-lockdown levels by next week.
Prior to the pandemic-induced halt on March 28, Tesla workers in Shanghai were working three shifts covering 24 hours, seven days a week. The workers in the current closed-loop system have been doing 12-hour shifts, six days a week.
Although the shift is meant to be 12 hours, a shortage of some parts means most days work has had to stop after about eight hours, a person familiar with the matter said.
While workshops at the electric vehicle maker’s China plant were operating yesterday, the situation is fluid and logistics problems might force production to cease later this week, the person said, declining to be identified because the details are private.
One of the problems stems from a shortage of wire harnesses from Aptiv PLC, which had to stop shipping supplies from a plant that supplies Tesla and General Motors Co after infections were found among its employees, sources said on Monday.
Local media, citing an unidentified company official, reported that Tesla produced about 10,000 vehicles from its Shanghai plant between April 19 and April 30, or a run rate of about 830 vehicles a day.
Videos posted online last week showed dozens of workers at Apple Inc and Tesla supplier Quanta Computer Inc (廣達電腦) overwhelming hazmat-suited security guards and vaulting over factory gates fearing being trapped inside amid COVID-19 rumors.
Restrictions in Shanghai, Beijing and dozens of other major population centers and manufacturing hubs across China are taking a heavy toll on the world’s second-largest economy, with significant global spillovers on trade and supply chains.
Shanghai, a vital center for commerce, finance and manufacturing for China and beyond with a population of 25 million people, was enduring its sixth week of a city-wide lockdown.
The number of new COVID-19 cases in Shanghai has been falling for almost two weeks, but they remain in the thousands and restrictions were tightening.
“We are still in a critical period of epidemic prevention and control,” Shanghai Municipal Center for Disease Control and Prevention deputy director Sun Xiaodong (孫曉東) said.
Additional reporting by Bloomberg
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