Needle Bearing Shortage of Schaeffler’s Supplier Likely to Affect the Production of over 200 Models

Shanghai (Gasgoo)-On Sept. 18, Schaeffler Group, the world-renowned auto parts supplier, submitted a petition to Chinese government because of the shortage of its supplier. The petition spread widely on the Internet.

The petition said that Shanghai Jielong Metal Wiredrawing Co., Ltd., Schaeffler's only supplier of needle bearings had several environmental problems. It would be forced to stop production and had to dismantle some relevant manufacturing equipment on Sept. 10. Once the needle bearings are out of supply, the production of more than 200 car models from 49 auto companies might have to stop consecutively since Sept. 19.

Moreover, Schaeffler emphasized that needle bearings are vital components for most of its powertrain products. Because Jielong is Schaeffler's only supplier of needle bearings, it will take at least 3 months to find a new certificated alternative and prepare for production. During the period, the shortage of needle bearings is estimated to be more than 1,500 tons, leading a volume drop of Chinese auto production up to more than 3 million models theoretically, which equals to a loss of RMB 300 billion. So Schaeffler called on the Chinese government to grant it a three-month delay for the company so it could find another supplier after the compulsory accreditation process. Environmental Protection Bureau of Shanghai Pudong New Area criticized that Schaeffler has enough time to balance its production because Jielong was informed to stop production as early as nine months ago.

With the environmental laws growing increasingly strict, the butterfly effect becomes ubiquitous throughout all sectors. Companies need further improvement of supply chain to tackle with the dilemma brought by the shortage of only one supplier.