Business & Finance

The War in Ukraine Is Affecting the Supply of Wire Harnesses to Automakers

The War in Ukraine Is Affecting the Supply of Wire Harnesses to Automakers

Combustion cars are under threat thanks to the shortages of wire harnesses, which are used to bundle cables together. This humble, cheap part, is in such severe shortage thanks to the Russo-Ukrainian war, that, according to a piece in Reuters, many analysts believe that this could signal the end of combustion cars.


Motor1, an auto industry magazine, says that Ukraine is responsible for 7% of the European Union’s supply of wire harnesses. The automobile industry has already faced shortages of chips, and so, this new shortage has made production even more difficult. Suppliers of wire harnesses, such as Fujikura, Leoni and Nexans, have struggled to obtain wire harnesses, leading to German automakers, Porsche and Volkswagen (VW), suspending production in some of their plants. BMW has also struggled with the shortage and is working with distributors to address the problem. The company has indicated that it expects there to be disruptions to its productions due to shortages of wire harnesses.


Wire harnesses are not glamorous, high-tech components, but they are vital to the functioning of a combustion car. The supply chain disruption highlights the downsides of distributed supply chains and a production system built to function efficiently. As famed mathematician Nassim Taleb has pointed out, systems built for efficiency cannot also be robust systems. They are inherently fragile.


At the start of the war, the industry heralded the efforts of its workers, whom it lauded for keeping factories open in the middle of a war. Since then, things have changed. It is becoming hard to keep those factories open, even when they are open, they suffer from power cuts, curfews, and closures due to air raids. Producing wire harnesses in a war zone and getting those wire harnesses out of the country is not the easiest task in the world. The typical business does not have contingencies for such things. And so, from praising the heroism of the workers, auto makers have been forced to look for alternatives.


Reuters’ reporting indicates that automakers have responded to the crises by considering shifting to machine-made harnesses used in electric vehicles (EVs). Industry experts argue that this will accelerate the shift to EVs. However, the data indicate that EVs still account for just 6% of global auto sales, despite doubling in sales last year.


Nissan’s chief executive officer, Makoto Uchida, admitted that the company is considering shifting from wire harnesses to machine-made ones. Machine-made harnesses cost more compared to wire harnesses which are made with cheap labor. That is still some time away. Instead, the industry has shifted production away from Ukraine and to other low-cost producers. For example, Mercedes has shifted some production to Mexico and many Japanese suppliers have shifted production to Morocco, with others getting supply from Tunisia, Poland, Romania, and Serbia.


Even here, it must be said that these are temporary solutions. Production is inherently complicated, from wire harnesses to a Clek car seat, everything is defined by complexity. For instance, a single harness, which is a very simple part in the scheme of things, can be made with 10 different parts from 10 different suppliers. At one point, British automaker Bentley, believed it would lose 30% to 40% of its production, due to shortages of wire harnesses given the complexity of finding solutions for all the bits that make up a wire harness. Bentley, which is a division of VW, too has begun to think more closely about shifting to EVs.